The Nigerian Exchange Limited and Stanbic IBTC have called for greater participation in market making and securities lending to deepen liquidity, improve price discovery and strengthen the efficiency of Nigeria’s equities market.
The call was made on Tuesday during a webinar themed, “Unlocking Liquidity in the Equities Market: The Role of Market Making and Securities Lending.”
The event brought together market operators and stakeholders to examine how both mechanisms could support trade execution and broader participation in the secondary market.
Opening the session, the Chief Executive Officer of NGX, Jude Chiemeka, described liquidity as the “lifeblood of a functioning capital market.”
He noted that the strength of a market should be measured not only by the number of listed companies or its market capitalisation, but also by how efficiently investors could enter and exit positions, the competitiveness of bid-offer spreads and the quality of price discovery.
“Market making and securities lending are not simply technical market mechanisms; they are critical components of a modern market infrastructure,” Chiemeka said.
“We commend the Securities and Exchange Commission, under the leadership of Dr Emomotimi Agama, for creating an enabling regulatory environment for market making and securities lending. These initiatives provide a strong foundation for greater market participation, deeper liquidity, better price discovery, and a more efficient and resilient Nigerian capital market,” he added.
Nigeria’s capital market currently has a combined capitalisation of about N213tn, comprising approximately N156tn in equities and N56tn in fixed income, while exchange-traded funds account for about N61bn.
With eight designated market makers and an established securities lending framework in place, the market has a strong foundation for further secondary-market development through increased participation in both mechanisms.
Similarly, the Head of Equities Sales Trading at Standard Bank Group, Jesse Van Rensburg, highlighted securities lending as a vital tool for market makers, particularly in supporting two-way quotes and managing changing liquidity conditions.
He explained that market makers routinely navigate shifts in demand and supply, including periods when trading activity is heavily weighted towards offers rather than bids.
Access to securities lending, he noted, gives market makers greater flexibility to manage inventories and respond to market dynamics while continuing to provide liquidity to investors.
Van Rensburg also identified spread management, inventory risk and capital exposure as key considerations in effective market making.
Access to a pool of lendable securities, he added, helps market makers manage positions more efficiently, deploy capital effectively and maintain liquidity across varying market conditions.
The discussion underscored the complementary relationship between market making and securities lending, with greater access to securities strengthening the capacity of market makers to provide continuous liquidity, while increased market-making activity creates a more dynamic environment for securities lending.
For brokers, the opportunity extends beyond trade execution to a broader role in liquidity formation. Greater participation in both mechanisms supports more efficient execution, deepens trading activity and contributes to a robust secondary market.
However, stakeholders agreed that realising the full potential of both mechanisms would require continued collaboration across the market ecosystem, including brokers, market makers, custodians, asset managers, institutional investors, regulators and the Exchange.
Key priorities include improving securities availability, strengthening infrastructure, enhancing transparency and risk management, and broadening investor participation.