NIGERIA: FMDQ Set to Go-Live with its ETD Market

Monday July 3 2023

FMDQ Securities Exchange Limited a wholly owned subsidiary of FMDQ Group PLC, with the support of the Securities and Exchange Commission (SEC), the Central Bank of Nigeria (CBN), FMDQ Clear Limited, and key market participants, is set to provide with the introduction of its dynamic Exchange-Traded Derivatives (ETD) market, on Wednesday, July 12^th, 2023. The trailblazing FMDQ ETD market will go-live with three (3) products – the Federal Government of Nigeria Bond Futures, Treasury Bills Futures, and Open Market Operation Bills Futures. It is strongly envisaged that these products will deliver the dividends of a derivatives markets by serving as useful risk management tools, supporting price discovery, competitiveness, and market efficiency, which in turn will help attract capital flows, reduce cost of capital, promote secondary market liquidity, and ultimately deepen the Nigerian financial markets. The stage is, therefore, set for the go-live of the FMDQ ETD market, the biggest innovation to yet arise from the stables of the FMDQ franchise, following the launch of the Naira-Settled OTC FX Futures by CBN and FMDQ in 2016, which was instrumental in minimising the disequilibrium in the FX market, whilst attracting significant inflows into the Nigerian fixed income and equity markets. 

It is on this premise that FMDQ Securities Exchange Limited (“FMDQ Exchange” or the “Exchange”), in keeping with its mandate to advance economic progress by championing laudable market development initiatives in the Nigerian financial markets, activated the FMDQ Derivatives Market Project (the “Project”). Commencing as a feasibility study in 2015, the Project was set up with the aim to launch Nigeria’s most dynamic Exchange-Traded Derivatives (“ETD’’) Market, in collaboration with market stakeholders.  

In support of the launch of an active and thriving ETD market, FMDQ Exchange introduced the first of its kind Derivates-focused Podcast in Nigeria, ‘Q-Dialogue’, an FMDQ-framed colloquy, which is aimed at providing valuable, accurate, and objective information and insight on the FMDQ ETD market. Likewise, in furtherance of its business development mandate to implement initiatives that promote awareness and drive participation in the FMDQ derivatives market, FMDQ Exchange developed the ‘Q-Estimator’, an automated calculator that avails market participants the opportunity to estimate the cost of hedges and potential profit/loss in derivatives transactions or positions in the Nigerian financial markets, thereby equipping market participants to make strategic and informed investment decision-making in the FMDQ derivatives market. 

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