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Stanbic, Access, UBA accounted for 48% of trades executed in FMDQ Exchange markets

Election delay weighs on as index dips further by 0.8%

Stanbic IBTC Bank Plc maintained the 1st position, while Access Bank Plc and United Bank of Africa Plc occupied the 2nd and 3rd positions respectively in the January to December 2020 period for the overall FMDQ Exchange markets.

They accounted for a combined market share of 48 percent of all trades executed (buy and sell sides) in the markets, according to FMDQ Exchange’s recently released monthly report on Fixed Income and Currencies (FIC) market.

Providus Bank Plc, Unity Bank Plc and Jaiz Bank Plc were ranked 26th, 27th and 28th respectively at the bottom of the League Table. TAJ Bank Limited, trading only FX occupied the 29th position in the FMDQ Exchange markets.

Access Bank Plc, United Bank for Africa Plc and Stanbic IBTC Bank Plc retained the top three (3) positions ranking 1st, 2nd and 3rd respectively on the League Table in the inter-member trade category for the overall market.

Leaders in the Dealing Member Bank (DMB) versus Client trading category were Stanbic IBTC Bank Plc, Access Bank Plc and Standard Chartered Bank Nigeria Limited, while leaders in the Deposit Money Banks (DMB) versus Central Bank of Nigeria (CBN) trading category were Stanbic IBTC Bank Plc, Access Bank Plc and Zenith Bank Plc.

Turnover in the Fixed Income and Currencies (FIC) markets for the month ended December 31, 2020, was N19.89trrillion, representing a month-on-month (MoM) and year-on-year (YoY) increase of 35.31percent (N5.19trillion) and 20.91percent (N3.44trillion) respectively. Consequently, estimated total turnover for full year 2020 was circaN215.08trillion, indicating a YoY decrease of 7.57percent (N17.61trillion) on the turnover of N232.69trillion recorded in full year 2019.

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Foreign Exchange (FX) and Money Market transactions were the highest contributors to the FIC markets in December 2020, jointly accounting for 59.16percent of the total FIC market turnover, while OMO Bills and Money Market transactions accounted for majority of turnover in 2020, jointly contributing 50.54percent to total turnover

FX Market

Total FX market turnover in December 2020 was $19.72billion (N7.79trillion), representing a MoM increase of 81.25percent ($8.84billion) from the turnover recorded in November 2020 $10.88billion (N4.21trillion). This was majorly driven by increased FX intervention sales by the CBN to DMBs to reduce the build-up of unmet Clients’ FX demand in December 2020. Analysis of the growth in FX market turnover indicates that FX Spot and FX Derivatives turnover increased MoM by 60percent ($2.55billion) and 94.87percent ($6.29billion) respectively in December 2020, with 71.15percent of the increase in turnover driven by the turnover growth in FX Derivatives.

In the OTC FX Futures market, the near month contract (NGUS DEC 30 2020) with a total outstanding notional value of $2.20billion matured and was settled, whilst a new long-term (60-month) contract, NGUS DEC 31 2025 was introduced at a Futures price of $/N608.10, representing 3.24percent ($/N19.07) MoM increase in the Futures price, compared to the offer rate ($/N589.03) of the previous 60M contract (NGUS NOV 26 2025).

The total notional value of open OTC FX Futures contracts as at December 31, 2020, stood at circa $8.09billion, representing a further decrease of 9.51percent ($0.85billion) from its value as at November 30, 2020 (c.$8.94billion), and continuing its downward trend since May 2020.

The average CBN Official Spot $/N exchange rate remained constant at $/N379 in December 2020. Conversely, the Naira depreciated against the US Dollar at the Investors’ and Exporters’ (I&E) FX Window, losing 2.07percent ($/N8.01) to close at an average of $/N394.92 in December 2020 from $/N386.91 recorded in November 2020.

Similarly, the Naira depreciated against the US Dollar in the parallel market, losing 0.17percent ($/N0.81) to close at an average of $/N476.05 in December 2020 from $/N475.24 recorded in November 2020. However the average spread between the exchange rates in the formal (I&E FX Window) and irregulated (parallel) FX markets reduced by 8.15percent to $/N81.13 in December 2020, from $/N88.33 in November 2020 due to the higher depreciation of the Naira in the I&E FX Window.

Analysis revealed that the top three (3) DMBs by trade value in the Spot FX market were Stanbic IBTC Bank Plc, United Bank for Africa Plc and Standard Chartered Bank Nigeria Ltd., with a combined market share of circa (c.) 60percent of the overall value of Spot FX trades for the period under review. DMB verus Client trades accounted for circa 52percent of the trades executed.

In the FX Swaps market, Access Bank Plc, Stanbic IBTC Bank Plc and Standard Chartered Bank Nigeria Limited maintained the top three (3) positions. In the FX Forwards market, Stanbic IBTC Bank Plc, Access Bank Plc and Guaranty Trust Bank Plc occupied the 1st, 2nd and 3rd positions, respectively, whilst the top three (3) performers in the OTC FX Futures market remained Stanbic IBTC Bank Plc, Access Bank Plc and Standard Chartered Bank Nigeria Limited.

Fixed Income (FI) Market (T.bills, OMO bills and FGN Bonds)

In the primary markets, average discount rates for the 91-day, 182-day and 364-day T.bills increased MoM by an average of 0.68 percentage points (ppts), to close at a range of 0.03percent – 1.85percent in December 2020, while the discount rates for CBN OMO bills decreased MoM by an average of 1.01percentage points (ppts) to close at a range of 1.78percent – 6.07percent in December 2020.

Similarly, the coupon rates of the 15-year and 25-year FGN bond issuances increased by an average of 1.58ppts to close at a range of 6.95percent – 7percent in December 2020. The total value of T.bills and OMO bills outstanding as at December 31, 2020, remained constant MoM at N2.72trillion and N5.37trillion respectively, while the total value of FGN bonds outstanding as at December 31, 2020, increased MoM by 0.28percent (N0.03trillion) to N10.70trillion from N10.67trillion recorded as at November 30, 2020

Turnover for T.bills and FGN bonds increased by 60.33percent (N0.73trillion) and 15.82percent (N0.28trillion) to N1.94trillion and N2.05trillion respectively, resulting in an increase in their trading intensities to 0.71 and 0.19 in December 2020 from 0.44 and 0.17 recorded in the previous month. Conversely, OMO bills’ turnover decreased MoM by 25.43percent (N1.33trillion) to N3.90trillion in December 2020, resulting in a decrease in its trading intensity to 0.84 from 0.92 recorded in November 2020.

In December 2020, 6M^ – 12M T.bills were the most traded sovereign debt securities, accounting for 23.70percent (N1.87trillion) of the total Fixed Income market turnover, while 20Y – 30Y FGN bonds remained the most active long-term sovereign debt securities, accounting for 7.86percent (N0.62trillion) of the total Fixed Income market turnover.

There was a general increase in yields across the sovereign yield curve between November and December 2020. The spread between the 3M and 30Y sovereign debt securities increased by 47 basis points (bps) to 710bps in December 2020 from 663bps in November 2020, indicating a steepening of the sovereign yield curve.

Weighted average yields on short-term and medium-term maturities increased MoM by 1.36percent and 2.99percent respectively in December 2020, whilst the weighted average yields on long-term maturities decreased by 1.37percent. Further, inflation-adjusted yields remained negative across the yield curve in December 2020.

In the T.bills market, Stanbic IBTC Bank Plc and Access Bank Plc retained positions in the 1st and 2nd place respectively while Zenith Bank Plc maintained 3rd position. The top three (3) performers closed with a market share of circa 52percent of executed trades. Inter-member trades (that is trades between DMBs) accounted for circa 74percent of the trades executed in this market segment.

Stanbic IBTC Bank Plc, Access Bank Plc and Coronation Merchant Bank Limited maintained 1st, 2nd and 3rd position respectively in the bonds market segment. The top three (3) performers closed with a combined market share of c. 52percent. Inter-member trades accounted for circa 52percent and DMB versus Client trades accounted for the remainder.

Money Market [Repurchase Agreements (Repos)/Buy-Backs and Unsecured Placements/Takings]

Total turnover in the Money Market segment increased MoM and YoY by 76.89percent (N1.73trillion) and 48.51percent (N1.30trillion) respectively to a total of N3.98trillion in December 2020. This was jointly driven by the corresponding MoM and YoY increases in Repo/Buy-backs and Unsecured Placements/Takings turnover to N3.42trillion and N0.56trillion respectively in December 2020. However, average Overnight (O/N) and Open Buy Back (OBB) rates decreased by 26bps and 18bps to close at 1.36percent and 1.01percent respectively in December 2020 from 1.62percent and 1.19percent recorded in November 2020.

Ranking 1st, 2nd and 3rd places respectively, in the Repo/Buy-back market were Access Bank Plc, United Bank for Africa Plc, Guaranty Trust Bank Plc and Inter-member trades dominated this segment accounting for 99percent, with total trades executed by the top three (3) DMBs accounting for approximately 35percent of the market share.

In the trading of Unsecured Placements/ Takings, the top three (3) DMBs, with a combined market share representing c. 69percent of the overall trades executed in this market segment, were United Bank for Africa Plc, FBNQuest Merchant Bank Limited and Stanbic IBTC Bank Plc Trades between DMBs accounted for about 94percent of this market share.

Market Surveillance

Despite the increase in overall market activity, the total number of executed trades reported on the Bloomberg E-Bond Trading System decreased MoM by 22.17percent (961) to 3,374 in December 2020 from 4,335 recorded in November 2020. This was jointly driven by the MoM decrease in the number of trades recorded across all product categories – T.bills, OMO bills and FGN bonds in December 2020.