The management of
the Nigerian Stock Exchange (NSE), yesterday, reiterated that its
current trading platform is functional, against insinuations that it is
outdated following the Exchange’s move to replace it.
Emmanuel Ikazoboh,
interim administrator of the NSE, had announced last month that the
Exchange’s council approved the acquisition of a new trading platform.
“An ad-hoc
committee of management and council engaged with various vendors to
ensure that a new platform, which would address all concerns relating
to equities, derivatives, bond trading and dissemination of data, was
put in place,” Mr. Ikazoboh said.
The development,
however, generated concern among some market watchers who believed that
the existing trading platform may be outdated and not equipped,
particularly for bond trading.
Meanwhile, the
Exchange, in a statement yesterday, said the current “trading platform,
Horizon, designed and maintained by NASDAQ OMX, has capacity to support
trading in equities, fixed income securities (bonds, debentures,
treasury bills, etc) and derivatives.”
“The platform
supports two-way quotes (that is, price to buy and price to sell), as
against what is being claimed in some quarters. The trading platform,
which was installed at the inception of Automated Trading System on the
Exchange in 1999, has been very effective. It combines auction-style
trades, direct trading, negotiated deals and quote market,” the
statement said.
Quote market
“The quote market
is an implementation of a quote-driven market model where market makers
place a two-way quote that is a bid (buy) and an offer (sell) price at
the same time. These quotes are matched against orders from market
participants on a price-time basis. This means that the basis of
allotment is on price and time of entering the order.
“As against what
obtains in the Over-the-Counter (OTC) Market where transactions are
between two parties (that is the buyer and the seller), the Quote
market supports many-to-many call auction where many dealers trade at
the same time. This encourages transparency in price discovery,” the
statement further said.
It added that the
NSE Bonds trading platform has various means of trading, depending on
the options acceptable to the market operators and regulators.
“The trading
options include: Order Driven Market for Retail Traders and Quote
Driven Market for Market Makers. With these options, the trading
facility on the Exchange has the ability to cater for both the
wholesale and retail markets for fixed income securities,” it also said.
The statement added
that the current trading platform has “the facilities that allow
brokers/dealers to change a former order, cancel un-filled orders,
check outstanding orders, suspend and resume an order. It also supports
both Dirty and Clean Pricing.”
The Dirty Price of
a bond is the value of a bond exclusive of accrued interest, while the
Clean Price is inclusive of accrued interest.”
The Exchange said one of the advantages of the NSE Bonds trading platform over the OTC market is price discovery.
