The Managing Director/Chief Executive Officer, FMDQ Securities Exchange Plc, Mr. Bola Onadele.Koko has said that an effective and fully developed securities depository system is essential for maintaining and enhancing market efficiency.
This he said is one of the core characteristics of a mature capital market and the depository and attendant custodial service is one of the key ingredients of developed global markets.
Onadele stated this against the background of the commencement of operations by the exchange’s wholly owned central securities depository (CSD), FMDQ Depository Limited last month.
According to him, as a strategically positioned CSD, FMDQ Depository will complement the clearing function discharged by FMDQ Clear by providing the requisite framework for collateral caching, asset servicing and settlement services in the Nigerian financial markets, offering market participants an unrivalled opportunity to experience enhanced straight-through-processing.
He explained that FMDQ Depository is positioned to significantly reduce principal risks in the nation’s financial markets by linking securities and cash in a way that enhances delivery versus payment, thus facilitating seamless settlement finality.
Ahead of operationalising its business franchise, FMDQ Depository commenced leveraging on strategic partnerships and alliances formed by the FMDQ entities, whilst engaging its critical stakeholders, including regulators and market participants, across the value chain, on its operational readiness to implement value-added product and service offerings.
The exchange said those engagements with stakeholders had culminated in the progressive support of the Central Bank of Nigeria (CBN), which has taken the lead in upgrading relevant guidelines – starting with the 2009 Guidelines on the Issuance and Treatment of Bankers’ Acceptances and Commercial Papers, which was revised 10 years after on September 11, 2019, to ensure that market stakeholders have a choice of Nigerian depositories, thereby further enhancing market efficiency in the markets.
“With an overarching objective of making the Nigerian financial market globally competitive, operationally excellent, liquid and diverse, FMDQ, in collaboration with its Members, regulators and other stakeholders, will continue to work hard to place Nigeria on the global financial market map despite the numerous challenges,” the FMDQ boss said.
The three SEC-registered FMDQ entities, FMDQ Exchange, FMDQ Clear and FMDQ Depository, make up Africa’s first vertically integrated financial market infrastructure group, providing a one-stop platform for the seamless listing, trading, clearing, settlement and recording of financial market transactions across the debt capital, equity capital, foreign exchange and derivatives markets.