Dubai:
Al Ramz Capital, a subsidiary of Al‐Ramz Corporation Investments and Developments, has been appointed as a liquidity provider for Gulf Navigation Holding’s shares after obtaining the necessary approvals from Dubai Financial Market and signing the agreement on May 3.
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 emphasise 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.
“Since Al Ramz Capital has obtained the license of the market maker and the liquidity provider, we immediately activated the product by signing several agreements” said Mohammed Al Murtada Al Dandashi, Managing Director of Al Ramz in a statement.
