Today marks a historic milestone in the Nigerian financial markets as FMDQ Securities Exchange Limited and FMDQ Clear Limited, both wholly owned subsidiaries of FMDQ Group PLC, have successfully launched the highly anticipated FMDQ Exchange-Traded Derivatives (ETD) Market. With the full support of key stakeholders, including the Securities and Exchange Commission, the Central Bank of Nigeria, and the Debt Management Office, Nigeria, this dynamic ETD Market is set to transform risk management and deepen the Nigerian financial markets.
The FMDQ ETD Market opens up new possibilities for various market stakeholders, including corporates, foreign and domestic investors, and pension fund administrators, by providing them with a platform to hedge financial market risks in their operational and investment activities. This new avenue to convert risk to financial security is expected to attract capital flows, reduce the cost of capital, promote market liquidity, and ultimately enhance the overall resilience of the Nigerian financial system.
The integration of the banking sector and the capital market in Nigeria is set to take a leap forward through this initiative, with FMDQ Securities Exchange Limited and FMDQ Clear Limited playing central roles. As Nigeria’s largest Exchange by Turnover, FMDQ Exchange collaborated with FMDQ Clear, the country’s foremost Central Counterparty (CCP), to make the ETD Market a reality. Ten pioneer Deposit Money Banks and five pioneer non-bank financial institutions are actively participating in this initiative, poised to reshape the landscape of the Nigerian financial markets in the near-to-medium term.
The ETD Market’s success is backed by the CCP’s extensive risk management structures and robust financial resources, including a substantial $20 million in FMDQ Clear’s proprietary Default Resolution Reserve, as well as over $12 million contributed by members to the CCP’s default waterfall. This framework ensures that counterparty risks are effectively transferred to a credible world-class CCP, FMDQ Clear, providing greater confidence and security for market participants.
The FMDQ ETD Market begins its journey with two pioneer products: the FGN Bond Futures and USD-NGN Non-Deliverable FX Futures. These products will be traded and cleared on the state-of-the-art FMDQ ETD systems, the FMDQ Q-ex Trading System and FMDQ Q-ex Clearing System, respectively.
For the Nigerian financial markets, the development of the ETD Market has been a subject of keen interest among capital market operators, regulators, and market participants. This market plays a pivotal role in enhancing financial system stability and contributes significantly to the overall economy.
As part of its vision to transform the Nigerian financial markets into globally competitive, operationally excellent, liquid, and diverse markets, aligned with the FMDQ ‘GOLD’ Agenda, the FMDQ ETD Market emerges as a key component in the realization of this goal. By providing a thriving financial sector and promoting revolutionary growth, akin to other developed economies, the ETD Market holds immense potential for monumental progress.
The visionary pioneer members of the FMDQ ETD Market, comprising both banks and non-bank financial institutions, deserve commendation for their pivotal role in driving the activation of this market and fostering sustained growth and development in Nigeria’s financial landscape.
FMDQ Group, Africa’s first vertically integrated financial market infrastructure (FMI) group, stands at the forefront of providing essential services across various market segments, including debt capital, foreign exchange, equity, and derivatives markets. Through its wholly owned subsidiaries – FMDQ Exchange, FMDQ Clear, FMDQ Depository Limited, and FMDQ Private Markets Limited – the group offers registration, listing, quotation, integrated trading, clearing and central counterparty, settlement, risk management, depository, and data and information services.
As a sustainability-focused FMI group, FMDQ Group operates Africa’s premier Green Exchange, FMDQ Green Exchange, championing the transition towards a sustainable future. The launch of the FMDQ ETD Market represents a significant step towards furthering its mission and solidifying its position as a major player in Africa’s financial landscape.
