FMDQ Exchange secondary market turnover up 51.62% to N41.69trn

The total secondary market turnover on FMDQ Exchange was N41.69trillion in May, representing month-on-month (MoM) increase of 51.62percent (N14.19trillion) and year-on-year (YoY) increase of 164.26percent (N25.92trillion) from April 2024 and May 2023 figures, respectively.
According to recently released FMDQ Exchange financial markets monthly report for May 2024, foreign exchange (FX) and money market (MM) transactions dominated secondary market activity, jointly accounting for 73.37percent of the total secondary market turnover in May 2024.

The report noted that total spot market turnover for all products traded in the secondary market in May 2024 was N40.01trillion, representing a MoM increase of 53.53percent (N13.95trillion) from April 2024 figures.

The MoM increase in total spot market turnover was driven by the increase in turnover across all spot market product categories, as foreign exchange, fixed income (FI) and money market turnover increased MoM by 46.91percent (N5.22trillion), 33.36percent (N2.78trillion) and 90.15percent (N5.95trillion), respectively.

The increase in money market turnover was driven by the MoM increase in Repos/Buy-backs and Unsecured Placement/Takings transactions, while the uptick in FI turnover was driven by the increase in FGN Bonds and OMO Bills, offsetting the decrease in T.bills, CBN Special bills and other bonds.

The report noted that spot FX market turnover was $11.42billion (N16.36trillion) in May 2024, representing a 25.23percent ($2.30billion) MoM increase from the turnover recorded in April 2024 ($9.12billion).

In the FX market, the Naira depreciated against the US Dollar, with the spot exchange rate ($/N) increasing by 13.32percent ($/N191.21) to close at an average of $/N1,435.87 in May 2024 from $/N1,244.66 recorded in April 2024.

Further, exchange rate volatility increased in May 2024 as the Naira traded within an exchange rate range of $/N1,173.88 – $/N1,533.99 compared to $/N1,072.74 – $/N1,419.11 recorded in April 2024.

Fixed Income market turnover in May 2024 was N11.10trillion, representing a MoM increase of 33.36percent (N2.78trillion) from the turnover recorded in April 2024 (N8.33trillion).

The MoM increase in turnover was driven by the 189.03percent (N3.20trillion) and 21.31percent (N400billion) increase in OMO Bills and FGN Bonds, offsetting the 14.64percent (N670billion), 99.98percent (N140billion), and 28.50percent (N10billion) decrease in turnover across T.Bills, CBN Special Bills, and Other Bonds transactions, respectively.

As a result, the trading intensity (TI) for FGN Bonds slightly increased MoM by 0.01bps to 0.09 while the TI for T.Bills decreased MoM by 0.08bps to 0.32, the report further noted. 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 55.83percent (N3.45trillion) and 16.34percent (N1.01trillion) of the secondary market turnover for sovereign FI securities in the spot market, respectively.

In May 2024, the sovereign yield curve experienced a 0.74ppts MoM decrease in yield spread to -0.80ppts, indicating an inversion of the yield curve. Real (inflation-adjusted) yields remained negative across the yield curve in May 2024, declining further as rising inflation outpaces policy interest rates. Total turnover in the MM segment increased MoM by 90.15percent (N5.95trillion) to N12.55trillion in May 2024. The MoM

increase was driven by the 89.04percent (N5.87trillion) and the 836percent (N80million) increase in Repos/Buy-backs and Unsecured Placement/Takings transactions, respectively.

The average overnight (O/N) rate and Open Repos (OPR) rate (secured lending rate) increased MoM by 1.18 percentage points (ppts) and 1.38ppts respectively, to close at an average of 30.38percent and 29.61percent in May 2024.