Market Making

With an eye on creating liquidity that builds the foundation for investor confidence, enhancing volumes, increasing valuations, and improving performance in the market, SICO has been a pioneer market maker for a number of largescale listed entities on the Bahrain Bourse (BHB). With a robust track record of over 28 years of success, SICO’s Market Making division actively participates in bid and offer sides, narrows down price spreads, and creates a market for select stocks, post-IPO listings, cross listings, and mature listings. The division continues to maintain its role as the top market maker in Bahrain and since 2018, SICO has had licences to act as market maker on both UAE exchanges, the DFM, and ADX.

In 2016, SICO launched and co-seeded the Bahrain Liquidity Fund (BLF), originally valued at BD 41 million and reduced in size to BD 37.7 million in 2021. The BLF aims to create liquidity and to generate absolute returns for investors around the level of market returns. Since its inception, the Fund has gained traction and positive investment response, and continues to incur positive impact on market volumes, valuation, and performance.

In a year characterized by global market uncertainty, the Market Making division faced its fair share of challenges. Despite the decline in the BHB’s overall market liquidity owing to a variety of external market factors, including higher interest rates and Kuwait Finance House (KFH)’s acquisition of Ahli United Bank (AUB), the BLF continued to have a positive impact on the BHB and the Market Making team delivered a solid performance in 2022.

The BLF maintained its position as an active participant and liquidity provider on the BHB in its seventh year running, despite the drop in overall liquidity during the year. BLF transactions in 2022 represented 36% of the total ADTV on the Bahrain Bourse, compared to the 34% recorded in 2021. The increase in the participation rate over the past year is testament to the weight of the Fund’s role as a liquidity provider during times of market volatility. In terms of returns, the BLF generated a return of 1.98% in 2022, on the back of a difficult macroeconomic environment. This return includes cash dividends distributed to the Fund’s unitholders.