FMDQ Exchange says October secondary market turnover hits N41.23trn

…FX, Money Market transactions account for 75.74%

Total secondary market turnover recorded on FMDQ Exchange in October 2024 was N41.23trillion, according to its recently released financial markets monthly report for October 2024.

The record secondary market turnover in October represents month-on-month (MoM) increase of 14.54 percent (N5.23trillion) and year-on-year (YoY) increase of 90.05 percent (N19.53trillion) from September 2024 and October 2023 figures, respectively.

The report shows that Foreign Exchange (FX) and Money Market (MM) transactions dominated secondary market activity, jointly accounting for 75.74 percent of the total secondary market turnover in October 2024.

Also, the total spot market turnover for all products traded in the secondary market in October 2024 was N36.75trillion, representing a MoM increase of 9.40 percent (N3.16trillion) from September 2024 figures.

The MoM increase in total spot market turnover was driven by the increase across the FX, Money Market, and Fixed Income (FI) turnover by 8.49 percent (N1.28trillion), 10.76percent (N1.01trillion), and 9.50 percent (N870billion), respectively.

The increase in Money Market turnover was driven solely by the MoM increase in the Repos/Buy-backs product category. The increase in FI turnover was driven by the MoM increase across the T.Bills, OMO Bills, and FGN Bonds product categories, whilst turnover in the Other Bonds category decreased, and CBN Special Bills remained inactive.

Spot FX market turnover was $10.08billion (N16.36trillion) in October 2024, representing a 6.58 percent ($0.62billion) MoM increase from the turnover recorded in September 2024 ($9.46billion).

In the FX Market, the Naira depreciated against the US Dollar, with the spot exchange rate ($/N) increasing by 2.38 percent ($/N38.82) to close at an average of $/N1,631.71 in October 2024 from $/N 1,592.89 recorded in September 2024.

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Further, exchange rate volatility continued into October 2024 as the Naira traded within an exchange rate range of $/N1,552.92 – $/N1,675.49 compared to $/N1,539.65 – $/N1,6667.42 recorded in September 2024.

Fixed Income market turnover in October 2024 was N10trillion, representing a MoM increase of 9.50 percent (N870billion) from the turnover recorded in September 2024 (N9.13trillion). The MoM increase in turnover was driven by the increase in T.Bills, OMO Bills, and FGN Bond transactions during the review period.

The report also shows that in October 2024, the trading intensity (TI) for T.bills and FGN Bonds remained unchanged. T.bills with term-to-maturity (TTM) between >6M – 12M and FGN Bonds with TTM between >5Y – 10Y were the most traded sovereign FI securities, accounting for 30.88 percent (N1.58trillion) and 24.65 percent (N1.26trn) of the secondary

market turnover for sovereign FI securities in the spot market, respectively. The sovereign yield curve experienced a 3.64 percentage points (ppts) MoM decrease in yield spread to -4.09ppts in October 2024, depicting the steepening of the yield curve.

In October 2024, one (1)-year real (inflation-adjusted) yields in Nigeria remained negative (-9.86percent) and recorded the lowest value compared to selected emerging market. Total turnover in the MM segment increased MoM by 10.76 percent (N1.01trillion) to N10.39trillion in October 2024.

The MoM increase was driven by the 10.84percent (N1.01trillion) increase in Repos/Buy-backs. The average overnight (O/N) rate and Open Repos (OPR) rate (secured lending rate) increased MoM by 2.78ppts and 2.92ppts, respectively, to close at an average of 30.99percent and 30.59 percent in October 2024.

Total turnover in the FX derivatives segment in October 2024 was $2.76billion (N4.48trillion), representing a MoM increase of 83.19percent ($1.25billion) from September 2024 figures ($1.51billion).

The MoM increase in the FX derivatives turnover was driven by the 98.08 percent ($1.28billion) increase in FX Swaps, offsetting the 15.63percent ($0.03billion) decline in FX Forwards transactions, while the FX Futures market remained inactive during the review period.

Primary market

In the review month, the Debt Management Office (DMO) sold T.bills valued at N456.57billion across its auctions in October 2024, representing a 26.68 percent (N166.17billion) MoM decline in the value of T-bills sold across its auctions in September 2024 (N622.74billion). Conversely, the DMO sold FGN Bonds worth N289.60billion in October 2024.

This marked a 9.48 percent (N25.07billion) MoM increase on the amount sold in September 2024 (N264.53billion). Sovereign securities offered by the DMO in its FGN Bond and T.bills auctions were oversubscribed by 116.29 percent and 67.14percent, respectively, during the review period.

In October 2024, the CBN sold OMO Bills worth N731.14billion, representing a 2.33 percent (N16.64billion) uptick on the amount sold in September 2024 (N714.50billion). There were no new listings and redemptions of Non-Sovereign Bonds listed on FMDQ Exchange in October 2024, the value of Non-Sovereign Bonds outstanding was N2.240trillion.

The total value of CPs quoted on FMDQ Exchange in October 2024 was N30.58billion, representing a MoM decrease of 20.61 percent (N7.94billion) in the value of CPs quoted in September 2024 (N38.52billion). In October 2024, quoted CPs were issued by institutions from the agriculture (4), financial services (1), and the retail (2) sectors.

The outstanding value for CPs decreased MoM by 9.23 percent (N57.50billion) to N565.28billion in October 2024 due to the N88.08billion worth of CPs that matured during the review period.