The Nigerian Stock Exchange (NSE) last week released the much- awaited guidelines fro companies wishing to become market makers in the sliding capital market.
The NSE has been battling with an extremely bearish market since last following global economic melt down, but the exchange’s director general, Prof. Ndi Okereke-Onyiuke explained that the criteria is part of its recovery strategy.
A “market maker” is a stock market operator that is licensed by the NSE and registered by the Securities and Exchange Commission (SEC), to perform market -making activities on listed securities.
The guidelines further added that any prospective market maker must show evidence of proficiency in capital market activities be are ready to provide sustained quotes on specific stocks in which they wish to make market.
The NSE said an applicant must make market in at least three stocks across a minimum of two sectors. There shall not be more than three companies making markets in a stock at any time.
One of the criteria according to the NSE is to operate as a market maker, the company must be incorporated in Nigeria under the Companies and Allied Matters Act of 1990 and registered by the Nigerian Securities and Exchange Commission (SEC) as a market maker.
Such a company must have a minimum paid up capital of N2 billion, in addition to being able to maintain a minimum float of N10 billion at all times in addition to having a history of successful operations in the Nigerian stock market or any of the international stock markets.
The NSE also stated that a minimum quote size of 100,000 shares on both bid and offer would be required of a market maker and lastly, no market maker can make market in the shares of a company, which owns more than 29 per cent of its shares capital.