Market Makers play a critical role in contributing to the market quality of The Nigerian Exchange Limited (NGX) by providing improved liquidity and price efficiency, enabling investors to trade in a timely manner. A Market Maker is any Trading License Holder of NGX who, after being appointed to do so by NGX, has undertaken to enhance the market liquidity of a particular security in accordance with NGX rules. The primary role of a Market Maker is to maintain a fair and orderly market in its particular securities of responsibility and, in general, to contribute positively to the operation of the overall market by ensuring that buyers and sellers of securities can transact.
Market Making involves the act of entering bid and offer prices in the automated trading system for specified security (security specified by the NGX as available for market making) under the conditions stipulated by NGX. Market makers profit by charging higher offer prices than bid prices. The difference is called the ‘spread’.
Types of NGX Market Makers
Primary Market Maker
Any Market Maker who has been appointed by NGX as the foremost liquidity provider for a particular security and who has undertaken to assume the role.