$543m OTC FX Futures Contract Mature on FMDQ
By Dipo Olowookere
The Naira-settled OTC FX Futures market continues to show promise as another contract maturity and settlement successfully transpired in the month of November.
The OTC FX Futures contract-NGUS NOV 29 2017, with notional amount $543.05 million, matured and settled on FMDQ, on Wednesday, November 29, 2017; bringing the total value of contracts so far matured on the Exchange to circa $6.85 billion, and about $9.80 billion worth of OTC FX Futures contracts traded since the product launch, across different tenors (one through to 12 months).
The contract, which stopped trading eight days before maturity, was valued against the NAFEX–the Nigerian Autonomous Foreign Exchange Fixing-spot rate as published by FMDQ on maturity date and the associated clearing/settlement effected in line with the FMDQ OTC FX Futures Operational Standards.
The Central Bank of Nigeria (CBN) introduced a new contract, NGUS NOV 28 2018 for $1 billion at $/N362.15 to replace the matured contract and refreshed its quotes on the existing contracts.
With the consistent support provided by the CBN, success in the operations of the OTC FX Futures market has been maintained.
It is therefore, safe to express that the OTC FX Futures market has contributed immensely to improving confidence in the Nigerian FX market, and to expect that the OTC FX Futures product will continue to pave the way for market participants to effectively and efficiently manage their FX risk, and by extension foster FX market liquidity.