The liquidity of a company's shares is determined by the available volume, order depth and spread, i.e. the difference between the purchase price and the selling price. In practice, liquidity provision means that an exchange member acts as a guarantor that there are buy and sell prices and a guaranteed available volume in the share, and that the difference between the buy and sell prices does not become too great. Of course, this is of great importance to investors, as a smaller spread has a major impact on transaction costs.
Liquidity provision is common and is currently used by more than 150 companies in the Swedish market. By using a liquidity provider, the listed companies' current and future shareholders' interests are safeguarded.
Provided that certain conditions are met, NGM offers, through its sister company Euwax AG, almost all companies a basic liquidity. Base liquidity does not replace a liquidity provider, or, where applicable, a requirement to engage a liquidity provider, since basic liquidity only ensures that there is some basic liquidity in the relevant share.