FMDQ OTC unveils e-markets for real time data access

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LAGOS (Sundiata Post) – FMDQ OTC Securities Exchange has unveiled an electronic market portal for its real-time market data for its dealing members  This platform seeks avail brokers, investment analysts, dealers, market makers and all other authorised users with access to market updates and data for use.

The unveiling of this market portal comes as the Exchange has released guidelines how the Naira-Settled Over-the-Counter Foreign Exchange (OTC FX) futures market will work. Sundiata Post investigations reveal that FMDQ OTC Securities Exchange is the market where authorised dealers shall buy and sell FX among themselves on a two-way quote basis via the FMDQ Thomson Reuters FX Trading Systems (TRFXTConversational Dealing) as required by the Central Bank of Nigeria.

According the FMDQ guidelines, the proposed naira-settled OTC FX Futures are non-deliverable forwards. (i.e. a contract where parties agree to an exchange rate for a predetermined date in the future, without the obligation to deliver the underlying US Dollar (notional amount) on the maturity/settlement date).

On the maturity date, it will be assumed that both parties would have transacted at the Spot FX market rate. The party that would have suffered a loss with the Spot FX rate will be paid a settlement amount in Naira. This ensures that both parties enjoy the rate that had been guaranteed each other through the OTC FX Futures.

The Central Bank of Nigeria (CBN) is expected kick off the market by acting as the seller of OTC FX Futures contracts for defined tenors i.e. 1 million, 2 million, 3 million, 6 million, 9 million, 12 million, 18million, and 24 million.

The USD/NGN OTC FX Futures contracts will provide the CBN the opportunity kick-start the liquidity of risk management products available to end-users in the FMDQ OTC markets. The contracts will assist the CBN in managing the volatility in the Spot FX market thereby promoting stability and entrenching confidence in the FX market. All OTC FX Futures contracts will be trade-backed. Visible, invisible and investments qualify for OTC FX Futures.

FMDQ is promoted by the Financial Markets Dealers Association (FMDA) in 2009 and sponsored in 2010 by the Bankers’ Committee. The Bankers’ Committee is chaired by the Central Bank of Nigeria (CBN), with the Nigeria Deposit Insurance Corporation (NDIC) and all the banks and discount houses operating in Nigeria as its members.

The Committee resolved operate all the over-the-counter (OTC) inter-bank market activities in fixed income and currencies a Securities and Exchange Commission (SEC)-registered self-regulatory organisation, and be governed by this authorised body.

In order fulfil this purpose, FMDQ OTC Securities Exchange was incorporated on January 6, 2011 following a ₦100 million contribution by the CBN and equal contribution of ₦15 million by each of the 25 banks and 5 discount houses (operational as at December 2010) to the company’s initial capital. Having met all required stipulations, FMDQ was on November 6, 2012 registered by as an OTC securities exchange and self-regulatory organisation.