DOHA: Qatar Financial Markets Authority (QFMA) has approved the liquidity provision scheme that can be carried out by the financial services firms, which are members in Qatar Exchange (QE), said a press statement yesterday.
The scheme will enable such firms to submit constant quotes for the sale or purchase of a particular security to increase its liquidity as per the controls and conditions set forth in the Liquidity Provider Agreement.
The first Liquidity Provision (LP) license was issued to The Group Securities Co. Other LPs are expected to follow in the coming months.
QE CEO Rashid Al Mansoori said: “This enhancement offers a number of advantages for the market and investors, such as increasing the trading volumes and liquidity of specific securities because the liquidity provider is obliged to provide constant bids and offers in the trading system.
“This activity will assist in reducing the prices volatility, promoting confidence among investors, fostering the listing of new companies and helping to ensure fair and orderly market”.
The Chairman of The Group, Hamad bin Khalaf Al Moudadi, welcomed the recent development and expressed The Group’s commitment to work as a liquidity provider for the majority of market shares. He added: “This is a helpful step in the development of the market.”
Liquidity providers accept the obligation to provide bids and offers in pre-determined securities and in exchange receive a volume related discount on the trading fees. These obligations are reflected in an agreement between LP and the exchange. LPs can enter this activity either at their own initiative or at the request of a listed company.
Liquidity provider is a financial services firm which is a member of QE and licensed to practice Liquidity Provision Activity. The Liquidity Provider offers prices on a continuous basis to buy or sell a specific security in order to increase liquidity in accordance with the regulations and conditions specified in the Liquidity Provider Agreement.
The Peninsula
