Turnover in FIC market settles at N8.58trn

Turnover of transactions carried out in the Fixed Income and Currency Markets (FIC) for the month of March 2016 settled at N8.58trn; an increase of N2.02trn (30.70%) over the value recorded in February and a decrease of N1.89trn (18.06%) YoY.

Activities in the Foreign Exchange (FX) market accounted for 18.67% of the turnover, down 5.22 percentage points from the value recorded in February whilst transactions in Treasury Bills (T.Bills) increased by 1.99 percentage points, accounting for 37.66% of the total turnover. 

Secured market (Repurchase Agreements (Repos)/ Buy-Backs) and FGN Bonds accounted for 30.74% and 10.49% of the total turnover, respectively, whilst activities in Unsecured Placements/Takings contributed 2.40% to the total turnover.

Diamond Bank plc, Access Bank plc and Stanbic IBTC Bank plc ranked 1st, 2nd and 3rd respectively in their positions as the leaders in the value traded for the overall over-the-counter (OTC) market.

Stanbic IBTC Bank plc, gaining traction, moved two (2) steps up the League Table from 5th to 3rd place. The three (3) banks have a combined market share representing 32.00% of the overall trades executed (buy and sell sides) in the markets.

United Bank for Africa plc, previously occupying 3rd place, moved down to 4th place, whilst First Bank of Nigeria Limited moved down from 4th to 6th place. Keystone Bank Ltd., Unity Bank PLC and Rand Merchant Bank Nigeria Ltd remained at the bottom of the League Table, occupying the 21st, 22nd and 23rd positions respectively.

Access Bank plc, United Bank for Africa plc and Ecobank Nigeria Limited topped trading between Dealing Member (Banks) for the overall market. Leaders in the Dealing Member (Banks) – client trading category were Diamond Bank plc, Access Bank plc and Stanbic IBTC Bank plc.

The leaders in the Dealing Member (Banks) – Central Bank of Nigeria (CBN) trading category were Diamond Bank plc, Zenith Bank plc and Stanbic IBTC Bank plc

FX Market

Transactions in the FX market settled at $6.56bn, the same level as recorded in the month of February. On a YoY basis, FX transactions recorded a decline of $2.66bn (28.88%)  Member-Member trades recorded a decline of $23.86mm (28.74%) as activities nose-dived across all sub-categories.

Turnover in the Member-Client trading category, at $5.96bn, marginally offset the decline recorded in the Member-Member trading category for the period.

On aggregate, Spot transactions increased $206.65mm (4.07%) whilst Swaps transactions declined $220.62 (14.95%) to settle at $5.08bn and $1.48bn respectively. The CBN’s exchange rate remained flat at $/196.00 in the month whilst the Naira traded between $/197.60 and $/199.27 in the inter-bank market.

Rates in the parallel market averaged $/317.90 over the period under review

A detailed analysis of the FX market revealed that the top three (3) Dealing Member (Banks), Diamond Bank plc, United Bank for Africa plc, and Access Bank plc have a combined FX market share representing circa 49.00% of the overall trades executed in the market.

The Dealing Member (Banks)-Client trades comprised the bulk of this market share, accounting for 69.00% of the trades executed.

In the overall FX derivatives market, the top three (3) positions (with a combined market share of circa 83.00%) were occupied by Diamond Bank plc, Standard Chartered Bank Nigeria Ltd and Stanbic IBTC Bank plc respectively; with the Dealing Member (Banks)-Client trades accounting for 60% of these trades.

Standard Chartered Bank Nigeria Limited, Diamond Bank plc and Stanbic IBTC Bank plc respectively, came in at 1st, 2nd and 3rd positions in the FX Swaps market; while in the FX Forwards market, only Stanbic IBTC Bank plc (amongst the Dealing Member (Banks)) carried out any trades.

Fixed Income Market (T.bills and FGN bonds)

Turnover in the Fixed Income market settled at 4.13trn, representing 974.69bn (30.87%) above the value recorded in the previous month. Transactions in the T.Bills market accounted for 78.21% of the turnover, up 4.03 percentage points from last month’s value. Outstanding T.bills stood at 5.41trn, 118.87bn (2.25%) above the value as at February, whilst outstanding FGN bonds settled at 6.24trn, 125.00bn (2.05%) higher than the previous month’s value.

Trade intensity for the Fixed Income market settled at 0.59 and 0.15 for T.bills and FGN bonds respectively, with maturities between 6M and 12M being the most actively traded in the period under review.

The yield curve closed the month on an upward slope. Short-term and long-term yields inched up 2.40 and 0.23 percentage points on the average whilst mid-term yields experienced a decline of 0.10 percentage points in the month.

This curvature reduced the steepness of the curve as the spread between the 10Y and 1M yields settled at 5.47%, 2.48 percentage points lower than the previous month’s value.

Stanbic IBTC Bank PLC, Access Bank PLC and Ecobank Nigeria Ltd. occupied the 1st, 2nd and 3rd positions respectively in the T.bills market, with their combined market share at 30.00% of the overall trades executed. 91.00% of the trades carried out in this market during the period under review were between Dealing Member (Banks).

With a combined market share of 43.00% of total bonds traded, Access Bank PLC, Diamond Bank PLC and Stanbic IBTC Bank PLC (in the 1st, 2nd and 3rd positions respectively) led the value of trades carried out in this market for the period under review. Trades amongst Dealing Member (Banks) accounted for 76.00% of this market share 

Money Market (Repos/Buy-Backs and Unsecured Placements/Takings)

Activities in the Secured market (Repos/Buy-Backs) settled at ₦2.64trn, ₦960.33bn (57.26%) above the value recorded in February, whilst Unsecured Placements/Takings also recorded an increase of ₦64.77bn (45.85%) to close the month at ₦206.04bn. Money market rates remained relatively low over the course of the month.

Tight system liquidity drove OBB and ON rates to highs of 12.75% and 13.75%, respectively, days following liquidity tightening by the CBN. The CBN, at the last policy meeting, increased the Policy Rate to 12%, on the back drop of inflation increasing to 11.38%, whilst simultaneously increasing the Cash Reserve Requirement to 22.50%.

First Bank of Nigeria Limited, Diamond Bank plc and Access Bank plc occupied the 1st, 2nd and 3rd positions respectively in Repo/Buy-Back transactions. Inter-member trades dominated this market with all trades executed by the top three (3) accounting for 38% of the market share.

Ecobank Nigeria Limited, United Bank for Africa plc and Skye Bank plc occupied the 1st, 2nd and 3rd positions respectively in Unsecured Placements/Takings, representing about 66% of the trades in this category. Trades between Dealing Member (Banks) accounted for about 97% of this market share.

No trading occurred under the Dealing Member (Banks) – Client trading category in the period January to March 2016 for Repos/Buy-Backs and Money Market Derivatives, with only United Bank for Africa plc and Ecobank Nigeria Limited engaging in trading of Unsecured Placements/Takings.

During the same period, no trading occurred for T.bills, Bonds, Repos/Buy Backs and Unsecured Placements/Takings under the Dealing Member (Banks) – CBN trading category; with Diamond Bank plc being the sole participant in FX Derivatives and FSDH Merchant Bank Limited, the sole participant in trading of Unsecured Placements/Takings under this category

Market Surveillance

Executed trades captured on the E-Bond trading system for the month increased by 6,286 (66.50%) to settle at 15,738 comprising of 10,855 (68.97%) in T.bills transactions and 4,883 (31.03%) in bonds.

Of the total executed trades, 45.77% were on order book (AFO). Transactions in the bond market experienced an increase of 2,265 (86.52%) in executed trades whilst the T.bills market recorded an increase of 4,021 (58.48%) in executed trades