‘Functional Debt Capital Market Key to Sustainable Economic Growth’

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Bola Onadele.Koko
Bola Onadele.Koko

Goddy Egene

The Managing Director/Chief Executive Officer of FMDQ OTC Securities Exchange, Mr. Bola Onadele.Koko has said there must be a functional debt capital market (DCM) to build a sustainable economy.

Speaking during the listing of Access Bank Plc commercial paper on the FMDQ OTC last week, Onadele said the exchange recognised the importance of a fully functional debt capital market for sustainable economic growth.
This, he said, would make the exchange to continue to innovate and provide efficient services.

“In building a sustainable economy, FMDQ recognises the potential of a fully-functional debt capital market (DCM), and will therefore continue to innovate and provide efficient services and infrastructure, as may be necessary, to support issuers and investors, towards achieving an operationally excellent and competitive DCM,” he said.

According to him, from streamlining of its processes to the delivery of unrivalled services to the Nigerian debt capital, foreign exchange (fx) and derivatives markets, FMDQ is set to continue championing and effectively support initiatives in line with its product and market development agenda to further deepen and align the markets with international standards, and invariably contribute to the growth of the economy at large.

FMDQ OTC was licensed by the Securities and Exchange Commission (SEC) in 2013 as an OTC securities exchange and self-regulatory organisation to run the fixed income trading platform and organise the market to international standards
And it has facilitated transactions worth N340.98 trillion in the fixed income securities and currency market within three years.
The platform has boosted the fixed income market leading to transactions N340.98 trillion within three years. This shows an average yearly transaction of N114 trillion, which is a significant improvement on N39.693 trillion recorded a year before the platform commenced operations.

An analysis of the yearly transaction data obtained from FMDQ OTC showed that N103.57 trillion was recorded in 2014, which rose to N137.43 trillion in 2015. However, it dropped to N99.98 trillion so far this year, apparently due to the challenges in the foreign exchange market.

A further analysis of the transactions indicates that Treasury Bills accounted for the highest value of N113.29 trillion, followed by repurchased agreements/buy buy-backs, which recorded N83.86 trillion. Foreign exchange accounted for N72.81 trillion, while federal government bonds recorded N25.92 trillion. Foreign exchange derivatives accounted for N23.02 trillion just as unsecured placements/takings recorded N17 trillion among others.
The FMDQ OTC recently set up the Debt Capital Market Development (DCMD) Project to ensure the effective implementation of the recommendations drawn its debt capital market (DCM) workshop in 2015.
According to the exchange, the resolutions from the workshop have been translated into the Nigerian DCM Transformation Roadmap to be executed through the DCMD Project.

“The DCMD Project, having received the unrivalled support of the apex regulator, SEC, was officially launched during the Commission’s third Quarter Capital Market Committee Meeting, on November 24, 2016. Its focus on identifying and implementing quick-win strategies that would transform the Nigerian DCM into a world-class, properly functioning DCM by 2020 drawing strongly from SEC’s 10-year Nigerian Capital Market Master Plan (NCMMP), with the DCMD Project seeking to fast-track the realisation of the DCM initiatives in the NCMMP,” FMDQ said.
It added that the vision of the DCMD Project is also aligned with the Financial System Strategy (FSS) 2020 initiative, which is aimed at making Nigeria one of the top 20 economies in the world by 2020.