Liquidity Provision Activity Offers Various Advantages for the Market & Investors

Doha, May 01 (QNA) - 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. This scheme will enable these 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, said a press release issued here on Qatar Exchange website Wednesday . The first Liquidity Provision license was issued to The Group Securities Co. Other LPs are expected to follow in the coming months. QEs Chief Executive Officer Rashid Al Mansoori welcomed this step and commented: "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 Groups 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: A financial services firm, which is a member in the Exchange 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. Liquidity Provider Rules: the Rules and requirements set by the Authority and shall be adhered to by the Liquidity Provider. Liquidity Provider Agreement: The agreement signed between the Exchange and the Liquidity Provider, in which the Exchange determines the conditions that must be complied with by the Liquidity Provider. The agreement sets rules for identifying the securities allowed for trading by the Liquidity Provider and determining the Liquidity Provider duties in relation to securing prices of securities. (QNA)