• Friday, July 12, 2024
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BusinessDay

FMDQ OTC: Market Review

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OTC market summary

Total turnover recorded in the Fixed Income and Currency Markets (FIC) for the month of December 2015 was N7.43trn; a N2.66trn (26.40%) decrease MoM and a 3.14% (N29.67trn) drop YoY. FX market contribution to turnover for the month was 34.74%, compared to 20.42% recorded in the previous month, while activities in the T.bills segment accounted for a market share of 26.27% of total turnover.

Secured market transactions (Repos/Buy-Backs) accounted for 25.15% of total turnover in December, while FGN bonds’ contribution accounted for 8.94%. Activities in Unsecured Placements/Takings contributed 4.74% of total turnover.

Stanbic IBTC Bank PLC, Access Bank PLC and United Bank for Africa PLC maintained their positions as the leaders in value traded for the overall over- the-counter (OTC) market, closing the year at 1st, 2nd and 3rd places respectively.

The top 3 achieved a commendable combined market share of circa 27% of the overall trades executed (buy and sell sides) in the markets. Keystone Bank Ltd., Rand Merchant Bank Nig. Ltd. and Unity Bank PLC remained at the bottom of the table occupying the 21st, 22nd and 23rd positions respectively.

United Bank for Africa PLC, First Bank of Nig. Ltd. and Skye Bank PLC, topped trading between Dealing Members for the overall market. Leaders in the Dealing Member–Client trading category were Diamond Bank PLC, Stanbic IBTC Bank PLC and Access Bank PLC. The leaders in the Dealing Member-Central Bank of Nigeria (CBN) trading category were Diamond Bank PLC, Stanbic IBTC Bank PLC and Access Bank PLC

FX Market

Turnover in the FX market for the month settled at $10.89bn; a $2.34bn (27.41%) increase compared to the value recorded in November, with an average daily turnover of $0.52bn. Member-Member trades increased by $0.33bn (41.52%), while Member- Client trades also showed an increase of $2.01bn (25.95%) MoM. FX Spot and Swap increased by $1.80bn (25.90%) and $0.65bn (44.76%) MoM, to record turnovers of $8.75bn and $2.11bn respectively.

The CBN’s exchange rate remained flat at an average value of $/N195.99 within the month, while the inter-bank exchange rate traded at an average rate of $/N198.48. A detailed analysis of the FX market revealed that the top three (3) Dealing Members, Diamond Bank PLC, Stanbic IBTC Bank PLC and United Bank for Africa PLC, maintaining the 1st, 2nd and 3rd positions respectively, have a combined FX market share representing circa 55% of the overall trades executed in the market.

The Dealing Member-Client trades comprised the bulk of this market share, accounting for 70% of the trades executed. In the overall FX derivatives market, the top three (3) positions, with a combined market share of circa 68%, were occupied by Stanbic IBTC Bank PLC, Access Bank PLC and Standard Chartered Bank Nig. Ltd. The Dealing Member-Client trades accounted for the bulk of these trades (81%). In the FX swaps market, Stanbic IBTC Bank PLC, Standard Chartered Bank Nig. PLC and Access Bank PLC maintained the 1st, 2nd and 3rd positions respectively; and again in the FX forwards market, maintaining the 1st, 2nd and 3rd positions, were Access Bank PLC, Standard Chartered Bank Nig. Ltd. and Stanbic IBTC Bank PLC respectively.

Fixed Income Market (T.bills and FGN bonds)

The total value of Fixed Income securities traded in the month of December was 2.61trn; a 2.87trn (52.32%) MoM decline. T.bills turnover came to 1.95trn, accounting for 74.27% of total Fixed Income Market turnover. On a YoY basis, turnover on T.bills decreased by 312.17bn (13.79%) and on FGN bonds, increased by 74.34bn (12.62%).

Trading Intensity for T.bills and FGN bonds decreased to 0.38 and 0.11 respectively, compared with 0.78 and 0.22 recorded in the month of November.

Bearish sentiments prevailed in the Fixed Income market within the period under review. On the average, the yield curve shifted upwards by 63 basis points. Access Bank PLC, Stanbic IBTC Bank PLC and Skye Bank PLC retained their positions as leaders in the T.bills market, occupying 1st, 2nd and 3rd places respectively. Their combined market share stood at circa 24% of the overall trades executed, with majority of the trades (84%) being among Dealing Members.

Stanbic IBTC Bank PLC, Access Bank PLC and Ecobank Nig. Ltd. maintained the 1st, 2nd and 3rd positions respectively in the FGN bonds market, with a combined market share of circa 37% of the total bonds traded. Trades between Dealing Members accounted for 66% of this market share.

Outstanding FGN bonds increased by 50.00bn (0.85%) to settle at 5.94trn from 5.89trn recorded in the previous month. Outstanding T.bills, comprising 45.80% CBN OMO bills and 54.20% Nigerian T.bills,  settled at 5.12trn in the review period; 194.77bn (3.67%) less than the previous month’s value. Net Debt Issuance for FGN bonds in December was 21.90bn, compared with 10.46bn in the previous month. Total coupon value paid on FGN bonds during the period under review amounted to 28.10bn 

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

Turnover in the Secured (Repos/Buy-Backs) market closed the month at 1.87trn; down 231.34bn (11.02%) from November. In the Unsecured market, turnover also decreased by 82.80bn (19.06%) MoM, closing at 351.73bn.

OBB and O/N rates fell further, recording averages of 0.65% and 1.06% respectively during the course of the month due to the persistent system liquidity.

First Bank of Nig. Ltd., Skye Bank PLC and Access Bank PLC occupied the 1st, 2nd and 3rd positions respectively in Repos/Buy-Back transactions. Inter-Member trades dominated this market with all trades executed by the top three (3) accounting for 35% of the market share.

United Bank for Africa PLC, Skye Bank PLC and Ecobank Nig. Ltd. maintained the 1st, 2nd and 3rd positions respectively in Unsecured Placements/Takings, representing about 57% of the trades in this category.

Trades between Dealing Members accounted for about 97% of this market share. No trading occurred in the period January to December 2015 for Repos/Buy- Backs and Unsecured Placements/Takings under the Dealing Member- Client trading category, nor for T.bills, bonds, Repos/Buy-Backs and Unsecured Placements/Takings under the Dealing Member – CBN trading category

Market Surveillance

Total number of trades in the Fixed Income market for the month of December amounted to 346,798; a decrease of 265,550 (43.37%) from the value recorded in November. RFQs constituted 93.93% of the total transactions.

The total number of deals on RFQs for FGN bonds was 1,161; 46.57% less than the previous month. Total deals on RFQs for T.bills also dropped to 4,288; a decrease of 68.88% compared to 13,713 recorded in the previous month.

AFOs filled in the FGN bonds segment witnessed a 47.41% decrease from the previous month’s count of 4,554 trades to 1,409, while filled T.bills’ orders also dropped 38.94% from 2,123 in November to record 562 deals in December.

Trades in the T.bills segment dominated the Fixed Income market activities, accounting for 65.27% of all activities.

Of the total trades executed, 73.36% were from RFQs and 26.63% from AFOs, translating to a total of 7,400 trades.