10 Banks Facilitate N26tr Transactions on FMDQ OTC in 2 Months

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Stories by Goddy Egene
Stanbic IBTC Bank, the United Bank for Africa Plc and Access Bank Plc led seven other banks to facilitate transactions worth N25.63 trillion on the FMDQ OTC Securities Exchange in January and February 2019.
Total transactions in the two months stood at N34.27 trillion, but the 10 banks accounted for N25.63 trillion, which was 74.79 per cent of the entire transactions.

The other seven banks were: Standard Chartered Bank Nigeria Limited, Ecobank Nigeria Limited, First Bank of Nigeria Limited, Coronation Merchant Bank Limited, Citibank Nigeria Limited, First City Monument Bank Limited, and Zenith Bank Limited.
Trading in the fixed income and currency (FIC) market had opened with N15.08 trillion in January and rose by 27.2 per cent to N19.18 trillion in February to bring total value of transactions to N34.27 trillion.

In month of February alone, for instance, the Treasury Bills (T.bills) and Foreign Exchange (FX) market segments remain the major drivers of turnover in the FIC markets, jointly accounting for 77.88 per cent of turnover.

A breakdown of the transaction in FX market showed that turnover was $14.59 billion, representing a 20.6 per cent decrease from the turnover recorded in January. Also, a further analysis of FX turnover by trade type indicates a decline across all three segments, as FX turnover for Inter-member, Member-clients and Member-CBN trades declined by 11.61 per cent, 25.52 per cent and 11.59 per cent respectively.
Conversely, turnover at the Investors & Exporters (I&E) FX Window in February recorded a 232 per cent increase to close at $9.96 billion, from the $3 billion recorded in January2019.

Analysis of FX turnover by product type showed a decline for both FX Spot and FX Derivatives, with FX Spot recording a decrease of 23.33 per cent and accounting for 70.44 per cent of the total decline in FX turnover.
The decrease of 16.14 per cent in FX Derivatives was driven by a 57.04 per cent decline in FX Futures turnover, despite increases in FX Swaps and FX Forwards turnover by 5.89 per cent and 0.99 per cent respectively.

Meanwhile, T.bills outstanding recorded an increase of N1.08 trillion to close at N16.10 trillion , with opening market operations (OMO) Bills accounting for 100 per cent of the increase while actual T.bills outstanding remained unchanged, as the CBN continued its liquidity mop up via OMO auctions to curtail build-up of inflationary pressure.

Similarly, FGN Bonds increased by N0.26 trillion to close at N8.52 trillion as at February 28, 2019.
Furthermore, the split in sovereign debt between long-and short-term debt as at February2019 was 76:24(long vs. short term), higher than the target ratio of 75:25 outlined in the Debt Management Strategy.

Monthly Trading Intensity in the T. bills and FGN Bonds markets increased from 0.46 and 0.08 in January2019, to 0.54 and 0.12 in February 2019 respectively. Year to date trading intensity in both markets stood at 1.00 and 0.21respectively compared to 0.85 and 0.19 as at the same period in 2018, due to the 42.88 per cent (N4.98 trillion) growth in T.bills and FGN bond s turnover, which exceeded the 17.59 per cent (N3.47 trillion) growth in average T.bills and FGN bonds outstanding in 2019 compared to same period in 2018. T. bills within the 6-12 month maturity bracket remained the most actively traded in January 2019, accounting for 45.68 per cent of the total fixed income market turnover.