NGX Stanbic IBTC: Boosting Nigerian Capital Market Liquidity Through Securities Lending

• The Nigerian Exchange Limited and Stanbic IBTC Stockbrokers Limited hosted a webinar on market making and securities lending to deepen liquidity in the equities market.
• Market making and securities lending are critical components of modern market infrastructure, providing a strong foundation for greater market participation and deeper liquidity.
• Lawyers should be aware of the potential impact of increased securities lending on their clients' portfolios, particularly inventory risk and capital exposure.
• Greater access to securities lending can strengthen the capacity of market makers to provide continuous liquidity, while increased market-making activity creates a more dynamic environment for securities lending.

Market making and securities lending are not simply technical market mechanisms; they are critical components of a modern market infrastructure.

The Nigerian Exchange Limited (NGX) and Stanbic IBTC Stockbrokers Limited recently hosted a webinar titled 'Unlocking Liquidity in the Equities Market: The Role of Market Making and Securities Lending.' The event brought together market operators and stakeholders to discuss how market making and securities lending can support trade execution and broader participation in the secondary market. During the session, NGX's Chief Executive Officer, Jude Chiemeka, emphasized that liquidity is the 'lifeblood' of a functioning capital market. He noted that market making and securities lending are critical components of modern market infrastructure, providing a strong foundation for greater market participation, deeper liquidity, better price discovery, and a more efficient Nigerian capital market.

The Securities and Exchange Commission (SEC) has created an enabling regulatory environment for market making and securities lending. This initiative provides a strong foundation for greater market participation, deeper liquidity, better price discovery, and a more efficient and resilient Nigerian capital market. The SEC's leadership under Dr Emomotimi Agama has been commended by NGX for its efforts in creating this conducive environment. 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.

Lawyers should be aware of the potential impact of increased securities lending on their clients' portfolios. Securities lending can expose investors to inventory risk and capital exposure, which market makers must carefully manage. Greater access to securities lending can strengthen the capacity of market makers to provide continuous liquidity, while increased market-making activity creates a more dynamic environment for securities lending. Brokers also have an opportunity to play a broader role in liquidity formation through greater participation in both mechanisms. However, realizing the full potential of both mechanisms requires continued collaboration across the market ecosystem.

Lawyers should watch for the potential impact of increased securities lending on their clients' portfolios, particularly in terms of inventory risk and capital exposure.

Source: Original reporting via NGX