A Liquidity Provider is appointed by a company with the sole objective of enhancing the liquidity of the underlying shares and increasing the frequency of transactions. The Liquidity Provider is independent of the company and has complete autonomy over trading. The LP will transact within pre-defined parameters that are agreed with the company. Some of the potential benefits to the issuer are an increase in price stability, lower trading costs, a reduction in the bid/ offer spread and the potential to increase the valuation metrics.
Al Ramz Capital will perform its duties as a liquidity provider through a specialised department, which is made up of equity professionals with over 30 years equity market experience between them. This department will determine the optimal liquidity level of the company’s shares, given the market price and underlying supply and demand observed. The Liquidity Provider will also be responsible for maintaining a tight spread between bids and offers, which will in turn provide investors with optimal entry and exit price levels in order to better manage their portfolios. It is important to emphasize on the vital role of the liquidity provider and market-maker to follow-up closely on the company’s financials and economic situation to determine the required price levels for the balance of trading according to the best standards to reduce liquidity risk, which will directly affect the process of equity valuations.
“We are happy to welcome Al Ramz Capital as the first liquidity provider in Abu Dhabi Securities Exchange. We are confident that having Al Ramz as a liquidity provider will add quality to market transactions in the coming period. Giving Al Ramz the liquidity provision license adds to the achievements of ADX, the last one being the initiation of short selling service, which makes ADX the first financial market in the region to launch technical short selling. The launched services meet the exchange’s disclosure and transparency requirements and guarantee the delivery of information to shareholders and investors directly in a short period of time. The variety of services that ADX has to offer adds to market depth and to ability of creating a more competitive market. ADX is committed to Abu Dhabi’s development plan through expanding the variety of services offered, improving the financial sector in the emirate, and creating a competitive business environment in Abu Dhabi ”Mr. Rashed Al Blooshi, Chief Executive of ADX stated
Mr. Sami Farahat, General Manager of Invest Bank said: “We are pleased to collaborate with Al Ramz Capital as a liquidity provider to the company’s stock and we believe such agreement will guarantee the liquidity of the stock and improve its trading activity”
“We are proud to be the first company to sign such an agreement in Abu Dhabi Securities Exchange. We would like to thank Mr. Rashid for hosting the signing ceremony and the ringing of the bell, which reflects the importance of such a service to the Emirati markets in enhancing the neutral role of the liquidity provider. Such neutrality come in the form of efficient capital markets, development of institutional presence, and attracting financial investments to the market due to the improved trading depth under such agreements. We look forward to having more listed companies sign similar agreements, especially in Abu Dhabi Securities Exchange. We are proud that our first cooperation in this regard was with Invest Bank.”
It is noteworthy to mention that Abu Dhabi Securities Exchange (ADX) provides integrated services in the areas of liquidity provision and market making. ADX also employs blockchain service in electronic voting during AGMs. The market has recently launched a series of services, the most important of which is Technical Short Selling, which makes ADX the first market in the region to launch such service to meet the disclosure and transparency requirements, and to ensure timely and direct communication of information to stakeholders and investors within a regulated framework to serve the needs of listed companies, shareholders, and analysts.