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OTC market records N9.36 trillion turnover in June 2016

By Helen Oji
25 July 2016   |   2:43 am
A breakdown of activities in OTC last month showed that Treasury Bills transactions accounting for 38.14 per cent of the total value while turnover in the foreign exchange (FX) market, accounting for 26.07 per cent of total turnover, settled at $8.98 billion.
Chief Executive Officer of FMDQ, Bola Onadele

Chief Executive Officer of FMDQ, Bola Onadele

Figure represents 26 per cent rise over previous month

Over- The-Counter (OTC) market, last month, recorded a turnover  ₦9.36 trillion. The figure, according to FMDQ OTC Securities report was 26.00 per cent higher than the value recorded in the month of May 2016.

A breakdown of activities in OTC last month showed that Treasury Bills transactions accounting for 38.14 per cent of the total value while turnover in the foreign exchange (FX) market, accounting for 26.07 per cent of total turnover, settled at $8.98 billion.

The CBN took steps to restructure the FX market with the reopening of the inter-bank market, clearing of According to the report, FX backlog ($4.02 billion) and the introduction of Naira-settled OTC FX Futures – twelve consecutive monthly contracts with initial notional amounts of $1.00 billion each.

In the month of June, open-buy-back and overnight rates remained in the single digit range, closing at 4.23 per cent and 4.71m per cent respectively, with the turnover in the money market settling at ₦2.88 trillion.For the month of May 2016, the OTC market recorded a turnover of  ₦7.43 trillion.

The figure was 21.22 per cent lower than the value recorded in the previous month. During the period, FX transactions accounting for 13.30 per cent of the total value. In the fixed income market, bearish sentiments prevailed in the short mid and long-term maturities as yields trended upwards.

Similarly, open-buy-back and overnight rates remained in the single digit range, averaging 6.54 per cent and 7.08 per cent respectively, while T-bills continued its dominance in the fixed income market, accounting for 82.51 per cent of all trades.

FMDQ OTC Securities, the selected platform for Naira-settled OTC FX Futures trading had recently that the OTC FX Futures market will attract significant capital flows to the Nigerian fixed income and equity markets and minimise the disequilibrium in the Spot FX market.

The Chief Executive Officer of FMDQ, Bola Onadele, at the launch of the product, in collaboration with the Central Bank of Nigeria (CBN) held in Lagos recently, assured stakeholders that there is no longer the need to front-load FX requirements, which puts immense pressure on and distorts the Spot FX rate.

According to him, with the kick off of  the Naira-settled OTC FX Futures market, and the CBN selling OTC FX Futures contracts of non-standardised amounts for different tenors from one  month through to 12 months which will settle on bespoke maturity dates, providing liquidity in the product that will enable corporate treasurers effectively and efficiently manage their FX risk, the market has been positioned for a successful operation.

To ensure credibility of the contracts, especially at maturity, onadele explained that the Spot FX rate would be the FMDQ Spot FX Rate Benchmark.“Futures product is a major milestone development in the evolution of the Nigerian financial markets. The Futures market is an opportunity to transform risk into certainty – a major paradigm shift in the financial markets landscape. This innovation provides opportunities for government, businesses, pension fund administrators, investors, individuals etc. to hedge (not speculate) to cope with exchange rate risk.

It also affords the CBN a greater opportunity to manage exchange rate volatility, thus achieving greater market confidence, liquidity, improvement in business planning, job security, employment, better allocation of resources, global competitiveness of the Nigerian financial markets, and all in all, a thriving economy,” he added.

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