Nigeria’s over-the-counter bond market, the FMDQ Securities Exchange, grossed only N133.66 trillion in 2016, as newly introduced foreign exchange futures continued to boost forex derivatives.
The report showed that turnover decreased 17 percent from ₦137.43trn in 2015 to ₦113.66trn in 2016, due to the harsh operating environment characterized by rising oil price and exchange rate volatility.
The turnover represents trades executed among Dealing Members, Dealing Members & Clients, and Dealing Members & the Central Bank of Nigeria.
The 2016 transaction report by the FMDQ reflects that trading activities in Treasury Bills (T-Bills) contributed the largest to overall turnover, accounting for 40.00 per cent of the market. Secured market transactions or Repos/Buy-backs accounted for 27.00 per cent whilst FX market transactions accounted for 22.00 per cent.
Transactions in Bonds accounted for 8.00 per cent and Money Markets transactions including unsecured placement & Takings, Commercial Papers and Money Market Derivatives accounted for 3.00 per cent of the total turnover.
The OTC market year will focus on standardization of repurchase agreements trading with collateral management, new products development geared towards short-term and private companies’ bonds as well as financial markets education for FMDQ markets’ stakeholders.
Other areas of focus include development of the non-interest finance or Sukuk market, expansion of the fixed income and currency derivatives market and Nigerian debt capital market development in line with the Capital Market Master Plan of the Securities and Exchange Commission (SEC).
Though mindful of the economic headwinds, FMDQ said it is imbuing 2017 with much enthusiasm and expects to continue to focus on its core mandate, leveraging on and garnering the collaborative support of its stakeholders, in order to foster economic development relevant to the growth of the Nigerian financial markets.
In its pursuit to position Nigerian market to global stage, the OTC Exchange experienced positive growth in the Foreign Exchange Derivatives product line, propelled by the introduction of the OTC FX Futures product into the market.
Since it was launched in Nigerian financial market in 2013, the OTC market has continued to advanced initiatives towards providing an enabling environment for the growth and development of the Nigerian fixed income, currencies and derivatives markets and the economy at large.
As a market organiser, the OTC Exchange has through its product and market development initiatives empowered the markets within its purview to enhance their global competitiveness, transparency and liquidity.
FMDQ in a report said that as a self-regulatory organisation and front-line regulator of its Members’ activities, it has led calculated initiatives, guaranteeing that essential and quality oversight is provided, to make the Nigerian markets credible, in line with international standards.