FMDQ Securities Exchange targets OTC derivatives in 2017

FMDQ OTC Securities Exchange on Wednesday said that it would introduce OTC derivatives into the market by 2017 to further deepening of the Nigerian Debt Capital Market (DCM).

Ms Kaodi Ugoji, FMDQ Vice-President, Strategy and Corporate Services Division, said in Lagos that product diversification would be the company’s key focus in 2017.

A derivative is a contract between two parties which derives its value/price from an underlying asset. The most common types of derivatives are futures, options, forwards and swaps.

Ugoji said that the company had engaged a consultant for the purpose, noting that the consultant would come up with the best derivative to be launched in 2017.

She said that the consultant would “talk with participants and players of NCM on the type of derivative to be offered to make it a success.’’

Ugoji said that the company would come up with an implementation plan on the type of derivative to be introduced as advised by the consultant.

She said that FMDQ would focus on market infrastructure and standardisation in the current year aimed at providing the right infrastructure in its market place.

According to her, the company will focus on market diversification and integration with external financial markets in 2018 and 2019 respectively.

Speaking further, she noted that the company’s N100 million Investor Protection Fund (IPF), would likely be launched in the third quarter of 2016.

Ugoji said that the bottlenecks that affected the funds take off in 2015 had been addressed as directed by the Securities and Exchange Commission (SEC).

She also said that the company had set up trustees and fund managers that would manage the funds as well as the framework.

Ugoji said that 50 per cent fine collected from participants that erred in the market in 2015 would also go into the fund.

NAN reports that the company recorded a turnover of N137.40 trillion between January and December 2015, representing an increase of 33 per cent.

This is against the N104 trillion worth of transactions recorded in 2014.

FMDQ OTC platform, inaugurated on Nov. 7, 2013, was licensed by the Securities and Exchange Commission (SEC) in 2012 to provide oversight on the OTC market in Nigeria.

FMDQ OTC is a securities exchange for listing and trading of fixed income products such as Treasury bill, bond and foreign exchange among others.