By Bamidele Famoofo
Turnover on the floor of FMDQ OTC Securities Exchange, where short to medium term yielding investment activities are transacted, stood at N34.27 trillion as at end of February, 2019.
The figure represented about 19 per cent of total turnover reported in 12 months in 2018. A sustained performance of the first two months would translate to a better performance in 2019.
Turnover in 2018 stood at N182.86 trillion representing an average of turnover of N15.2trillion monthly.
Breakdown of contribution of the various segments of the market to total turnover in January and February showed that T-bills accounted for about 43.30 percent attracting N14.84trillion or $40.90billion from investors. Foreign Exchange (FX) polled about N7.91trillion representing 23.1 percent of total transaction value in the period.
Repurchase Agreements/Buy- Backs contributed 16.2 percent of total turnover in two months at N5.54trillion. Foreign Exchange Derivatives also accounted for 11.85 per cent of turnover at N4.06trillion in two months.
Investors splashed N1.73trillion (about $4.78billion) on the Federal Government Bond in the space of two months which represented 5.05 per cent of total turnover the review months of January and February.
Other investment instruments on which investors staked their money include Unsecured Placements/Takings which attracted about N151.99billion or 0.44 percent of turnover and Eurobonds, N33.77billion, representing about 0.1 per cent of turnover. Other Bonds attracted N111million from investors in the review period.
The top 10 Dealing Member (Banks) accounted for 74.79 percent (N25.63 trillion) of the overall turnover in the market, with the top three banks accounting for 50.30 per cent (N12.89 trillion) of this sub-section of the market. Stanbic IBTC Bank Plc, United Bank for Africa Plc and Access Bank Plc were the leaders in the value traded for the overall over-the-counter (OTC) market, ranking 1st, 2nd and 3rd respectively. Other top dealing banks in the order of their ranking among the top 10 are Standard Chartered Bank Nigeria Limited, Ecobank Nigeria Limited, First Bank of Nigeria Limited, Coronation Merchant Bank Limited. The rest are Citibank Nigeria Limited, First City Monument Bank Limited and Zenith Bank Plc.
FMDQ in its outlook for 2019 said, having delivered value-adding initiatives and solutions in line with its 2018 strategic focus – Market Diversification, FMDQ, leveraging on the effective support and collaboration of its stakeholders remains committed to continue working assiduously, in 2019, to deliver innovative and key market development initiatives.
The company disclosed that it would introduce new derivatives products to the financial market landscape, and expansion of the Nigerian derivatives market; activate new products such as repurchase agreement (Repo) with collateral management service and ensure full operationalisation of the DMS Market to further enhance market integration and retail participation in the fixed income markets.
Other key market development initiatives which the company said it would introduce in 2019 to further enhance market depth include Infrastructure/Housing development, sustainable finance development and development and launch of new/co-branded indices as well as financial market education and capacity building for its stakeholders through FMDQ Academy.
So far in 2019, FMDQ has maintained its support for the development of the Nigerian commercial paper (CP) market. According to a report from the company, the month of March saw key activities in the CP quotations space on the Securities Exchange, wherein the Board Listings, Markets and Technology Committee of FMDQ approved the quotations of Flour Mills of Nigeria Plc N5.18 billion Series 5 and N1.74 billion Series 6 CP under a N100.00 billion CP Issuance Programme and UACN Property Development Company Plc N5.62 billion Series 32 and N7.96 billion Series 33 CP under a N24.00 billion CP Issuance Programme, to its platform.
“In addition to the efficient registration process, the quotations of these CPs on FMDQ will avail Flour Mills of Nigeria PLC and UACN Property Development Company PLC benefits which include, but are not limited to, enhanced investor confidence in the issuers, transparent/relevant information disclosure on the issues, effective price formation and global visibility’, FMDQ disclosed.
Chief Executive Officer of the company, Bola Onadele.Koko, noted that in line with its strategic objectives to support institutional growth and stimulate continuous development of the economy at large, FMDQ has shown its steadfastness in aligning the Nigerian debt capital markets to international standards, through the promotion and provision of a world-class quotations service, availing issuers and investors the much-needed global visibility, confidence and protection in the markets.
Meanwhile, summary of activities in the market in 2018 showed that trading activities in the treasury bills (T-bill) market contributed the largest to overall turnover, accounting for 39.44 percent of the total market turnover, whilst foreign exchange (FX) transactions (including FX derivatives) followed with a combined share of 37.04 percent, and Repos/Buy-backs accounted for 16.50 percent. Bonds and Money Market transactions (including Unsecured Placement & Takings, Commercial Papers and Money Market Derivatives), on the other hand, had smaller shares of the market, accounting for 6.55 percent and 0.47 percent respectively. The turnover represents trades executed among Dealing Members, Dealing Members & Clients, and Dealing Members & the Central Bank of Nigeria (CBN).
In addition to its market development activities, over the course of the year, FMDQ admitted the listings of fifteen (15) bonds with a total value of N315.52 billion. The OTC Exchange also admitted the quotations of sixty (60) commercial papers (CPs) with a total value of N505.30 billion. By their admission to the FMDQ platform, these securities have gained access to the full complement of the unsurpassed FMDQ Listings and Quotations Service, which includes, but is not limited to, improved secondary market liquidity, efficient listings/quotations process, unprecedented transparency and information disclosure, global visibility and improved network effects. Whilst the year came with its fair share of challenges for FMDQ’s markets, the markets experienced a steady development, with growth primarily driven by trading activities in the Treasury bills (T.bills) and FX markets. In all, the total over-the-counter (OTC) market turnover saw a year-on-year growth rate of 28.74 percent, rising from the N142.03 trillion recorded in 2017 to in N182.86 trillion 2018.