The financial brokerage subsidiary of Qatar National Bank (QNB), QNB Financial Services (QNBFS), will start giving liquidity provision (LP) for Milaha, one of the largest maritime and logistics companies in the Middle East, from April 1, 2021.
The new decision is in line with the LP agreement made between the QNBFS and Milaha, according to an official statement from Qatar Stock Exchange.
LP is one of the key components in the overall market development strategy of the Qatar Stock Exchange and liquidity providers would allow them to submit constant quotes for the sale or purchase of a particular security to increase its liquidity as per the controls and conditions mentioned in the LP agreement.
A liquidity provider is an underwriter or a market maker that is a substantial holder of a given security or that helps the trading, providing greater price stability and distribution of the securities to both retail and institutional investors.
The liquidity providers ensure transactions are made at the best price and improve its volume in the order book. Without their assistance, the number of activities in the security could decline and the ability of buy- and sell-side firms to accumulate or dispose of stock would be decreased.
Last year, the Qatar Financial Markets Authority (QFMA) had approved QNBFS to offer a liquidity provision scheme in order to assure higher price stability and improved liquidity in the country’s financial market.
The QNBFS has made investments in one of the most recognized international trading systems for liquidity provisioning activity. Further, it has brought inexperienced traders with advanced educational and professional experience in market making and liquidity provisioning.
QNBFS already has a pact with QNB and Qatar Islamic Bank to provide liquidity provision, while the Group Securities and Mannai Corporation had earlier entered into a pact for the liquidity provision services, following the QFMA approved liquidity provision scheme.