NGX, Stanbic IBTC push for more securities lending to deepen market liquidity

The Nigerian Exchange Limited (NGX) and Stanbic IBTC Stockbrokers Limited are pushing for greater involvement in market making and securities lending to boost the country's equities market. Officials emphasized that these practices are vital for enhancing liquidity, improving how prices are discovered, and making the market more efficient.

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liquidity as the “lifeblood of a functioning capital market.”

During a recent webinar themed "Unlocking Liquidity in the Equities Market: The Role of Market Making and Securities Lending," market operators and stakeholders discussed how these mechanisms can support trade execution and increase participation in the secondary market. NGX Chief Executive Jude Chiemeka called liquidity the "lifeblood of a functioning capital market," stressing that market strength is measured by efficient investor entry and exit, competitive spreads, and quality price discovery.

Chiemeka commended the Securities and Exchange Commission for fostering an environment conducive to market making and securities lending. He noted that Nigeria's capital market, with a combined capitalization of approximately N213 trillion (N156tn in equities, N56tn in fixed income, and N61bn in ETFs), has a solid foundation with eight designated market makers and an established securities lending framework.

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

Jesse Van Rensburg, Head of Equities Sales Trading at Standard Bank Group, highlighted securities lending as a key tool for market makers. It helps them manage inventories, respond to market dynamics, and maintain liquidity for investors, especially during shifts in demand and supply. He also pointed out that managing spreads, inventory risk, and capital exposure are critical for effective market making.

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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.