By Modupe Gbadeyanka
As the “curtains come down” and the year draws to an end, FMDQ has so far recorded over $9 billion worth of the Naira-settled OTC FX Futures contracts, traded across different tenors (one through to 12 months) on the platform of the OTC Exchange.
With about $6.31 billion of the contracts matured on FMDQ, the OTC FX Futures Exchange, market participants in the Nigerian financial market may appear to be gearing up for the planned introduction of other plain vanilla derivatives products in 2018 by FMDQ, ahead of more exotic types when the market is mature and ready.
Noteworthy is that, hedging products are key pillars in the global financial system which enable businesses around the world to invest freely and effectively hedge their risks/exposures.
The development of a vibrant derivatives market in Nigeria therefore remains pivotal to the mandate of FMDQ.
The Central Bank of Nigeria (CBN), through its associated market activities, continues to support the growth and potential of the OTC FX Futures market, ensuring that at any point in time, there are available for trade, monthly OTC FX Futures contracts across twelve (12) months. On October 25, 2017, the NGUS OCT 25 2017 contract with notional amount of $480.87 million matured and settled on FMDQ and the CBN, consistent with its treatment for other maturities, introduced a new 12-month contract, NGUS OCT 31 2018, for $1.00 billion at $/N361.89 to replace the matured contract.
The matured NGUS OCT 25 2017 contract was valued against the NAFEX-Nigerian Autonomous Foreign Exchange Fixing-Spot rate as published by FMDQ on October 25, 2017 and the associated clearing/settlement effected by the Nigeria Inter-Bank Settlement System PLC (NIBSS), in line with the FMDQ OTC FX Futures Operational Standards.
