Economy
FMDQ to Begin Exchange-Traded Derivatives Market July 12
By Adedapo Adesanya
The MDQ Securities Exchange Limited has announced plans to introduce its dynamic Exchange-Traded Derivatives market on July 12, 2023.
The new market will offer three products – the Federal Government of Nigeria Bond Futures, Treasury Bills Futures, and Open Market Operation Bills Futures, at the commencement of its operations.
The exchange, in a statement, said these products would deliver the dividends of the derivatives market by serving as useful risk management tools, supporting price discovery, competitiveness, and market efficiency, which in turn will help attract capital flows, reduce the cost of capital, promote secondary market liquidity, and ultimately deepen the Nigerian financial markets.
It noted that financial markets are plagued with heightened price volatility, fluctuating market prices/rates, and the constant uncertainty of macroeconomic indicators, with the Nigerian financial markets not faring any better.
Hence, the new ETD market is its response to the counter and assuage these adverse effects; robust and efficient risk management tools, such as derivatives, are typically employed.
“Whilst model markets have been able to harness the potential of the derivatives markets to mitigate risk efficiently, diversify investment portfolios, and allow businesses to pursue expansion with a higher risk in a safe manner, the reverse is the case in emerging and frontier markets, such as Nigeria, as derivatives markets are non-existent or small – with a dearth of derivatives products – at best, and hedging costs are high, making it uninteresting for market participants,” it said.
FMDQ noted that it conducted a feasibility study in 2015 to launch Nigeria’s most dynamic ETD market in collaboration with market stakeholders, thereby introducing exchange-traded risk hedging products to the Nigerian financial markets as is obtainable in other developing and developed financial markets globally.
The project, according to the firm, has recorded many milestones and implemented several initiatives including, but not limited to, the development of the FMDQ ETD Market Framework, SEC-approved Rules, and membership requirements; deployment of fit-for-purpose and optimised ETD trading and clearing modules on the FMDQ Q-ex System; development of Risk Management and Operational Framework across the financial market infrastructure (FMI) value chain; development of SEC-registered derivatives products; and execution of various stakeholder engagements and training sessions.
It was disclosed that it has impacted over 2,600 market stakeholders across the financial markets value chain, ranging from regulators, financial and non-bank financial institutions, corporate treasurers, accountants, legal practitioners, journalists and individuals, to sensitise and promote readiness for the imminent launch of the FMDQ ETD market.
As market participants position themselves to take advantage of the emerging novel segment of the financial markets, FMDQ Exchange is working with its 21 dealing members (DMs), three DMs with full licences and 18 DMs with Approval-in-Principle – to participate in the FMDQ ETD market as its pioneer Derivatives Trading Members (DTMs).
The DTMs will receive support from FMDQ Clear through six (6) Deposit Money Banks (DMBs) who will share mutualised responsibility, as Members of the CCP, in its mandate of ‘de-risking’ the Nigerian financial markets either as General Clearing Members (GCMs) – capable of clearing transactions for their proprietary positions and those of other DTMs and clients; or as Direct Clearing Members (DCMs) – capable of clearing their proprietary positions and those of their clients only.
It said of the six DMBs, there are five GCMs, three of which have full licences (Access Bank Plc, Stanbic IBTC Bank Plc, and Zenith Bank Plc), whilst the other two have Approval-in-Principle, pending the completion of their SEC registration (First City Monument Bank Limited and United Bank for Africa PLC). The sixth DMB (Fidelity Bank PLC) is a DCM with an Approval-in-Principle, also pending the completion of its SEC registration.
In support of the launch of an active and thriving ETD market, FMDQ Exchange introduced the first of its kind Derivates-focused Podcast in Nigeria, Q-Dialogue, an FMDQ-framed colloquy, which is aimed at providing valuable, accurate, and objective information and insight on the FMDQ ETD market.
To further its business development mandate to implement initiatives that promote awareness and drive participation in the FMDQ derivatives market, FMDQ Exchange developed the Q-Estimator, an automated calculator that avails market participants the opportunity to estimate the cost of hedges and potential profit/loss in derivatives transactions or positions in the Nigerian financial markets, thereby equipping market participants to make strategic and informed investment decision-making in the FMDQ derivatives market.
By Aduragbemi Omiyale
The chief executive of the Nigerian Exchange (NGX) Limited, Mr Temi Popoola, has called for regional collaboration among African nations for a stronger capital market.
Speaking at the launch of the Ethiopian Securities Exchange (ESX) recently, he stated that working together would unlock the continent’s economic potential, especially with innovative market solutions.
He disclosed that strategic investment of the Nigerian bourse in ESX underscores its leadership in advancing Africa’s capital market infrastructure.
“The launch of ESX represents a pivotal moment for Ethiopia and the broader African financial landscape.
“ESX will serve as a crucial mechanism for capital formation and market liquidity, driving sustainable economic growth,” Mr Popoola said.
Expounding on NGX Group’s investment rationale, he highlighted Ethiopia’s immense market potential and the shared vision of fostering economic growth through innovation.
“Our partnership transcends traditional investment parameters.
“It is about ensuring that ESX evolves into a key player in Africa’s financial ecosystem, enabling cross-border investments and setting benchmarks for market development,” he said.
Mr Popoola also drew parallels with global success stories like India, which has leveraged its capital markets to achieve significant economic transformation.
He emphasized the importance of responsible market opening to attract local and continental capital, noting, “By following this path, Ethiopia can become a financial hub in Africa.”
Drawing from NGX Group’s six decades of experience, Mr Popoola shared insights on diversifying financial instruments and expanding access to investment opportunities.
“With the right mix of innovation, policy support, and regional collaboration, Ethiopia’s capital market can play a transformative role in driving economic development and establish itself as a leader in Africa’s financial ecosystem,” he concluded.
On his part, the Prime Minister of Ethiopia, Mr Abiy Ahmed, lauded the launch of ESX as a transformative milestone in the country’s journey toward economic modernization.
“Today, we have officially rung the bell to launch the Ethiopian Securities Exchange, our nation’s first stock exchange,” the Prime Minister announced on X.
“This is a call to global investors: Ethiopia offers immense potential, a fast-growing economy, and a clear trajectory toward shared prosperity,” he added.
The chief executive of ESX, Mr Tilahun Esmael Kassahun, expressed confidence in the partnership with NGX Group.
“We are pleased to welcome NGX Group as a strategic partner, building upon the existing support we continue to receive from them,” he said, emphasising the value of NGX Group’s expertise in shaping ESX’s growth and success.
With the ESX poised to redefine Ethiopia’s financial landscape, NGX Group’s involvement highlights the critical role of partnerships and shared expertise in advancing Africa’s economic narrative.
By Adedapo Adesanya
Daily average oil production in Nigeria rose by 152, 000 barrels per day in November 2024, according to the latest data by the Organization of the Petroleum Exporting Countries (OPEC).
According to the OPEC Monthly Oil Market Report (MOMR) for December 2024, the country’s production, including condensates rose by 11 per cent from 1.333 million barrels in October to 1.486 million in November 2024.
The analysis puts the daily increase to 152,000 barrels per day and about one million barrels increase between October and November last year.
This is as the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) in its latest oil production data indicated that on a month-on-month basis, daily average oil output in December 2024 declined by 1.35 per cent from 1.690 million barrels per day recorded in November 2024 to 1.667 million barrels per day.
Data from the commission also indicated that daily peak oil production in December 2024 was 1.79 million barrels per day while the lowest daily production was 1.57 million barrels per day
Cumulatively, oil output in December 2024, was 51.69 million barrels, a marginal increase of 1.9 per cent when compared to 50.71 million barrels produced in November 2024.
Further analysis of the data showed that the highest oil output in December 2024 was recorded at Forcados Terminal at 8.49 million barrels followed by Bonny Terminal, 7.78 million barrels and Qua Iboe, 4.15 million barrels.
The data showed without condensate, daily oil production was 1.484 million, indicating that Nigeria, again, failed to meet its oil production quota of 1.5 million barrels per day allotted to it by OPEC.
A recent survey by Reuters, however, shows that Nigeria crossed the 1.5 million barrels per day target in December.
The December 2024 average daily oil output also means that Nigeria failed to meet the 1.7 million barrels per day benchmark set for the 2024 budget all through the year.
NUPRC data on daily average production showed that oil production including condensate in January 2024 was 1.64 million barrels per day; February, 1.53 million barrels per day; March, 1.44 million barrels per day; April, 1.45 million barrels per day; May, 1.47 million barrels per day; June, 1.50 million barrels per day; July, 1.53 million barrels per day; August, 1.57 million barrels per day; September, 1.54 million barrels per day, October, 1.54 million barrels per day November, 1.69 million barrels per day and December, 1.67 million barrels per day.
By Dipo Olowookere
The trio of Wema Bank, FBN Holdings, and Universal Insurance topped the activity chart of the Nigerian Exchange (NGX) Limited last week with a turnover of 1.679 billion shares worth N20.838 billion transacted in 4,922 deals, contributing 35.74 per cent and 24.50 per cent to the total trading volume and value, respectively.
Data from Customs Street showed that in the five-day trading week, investors bought and sold 4.698 billion stocks valued at N85.043 billion in 72,562 deals versus the 2.618 billion stocks sold for N69.742 billion in 47,953 deals in the preceding week.
The financial services industry attracted the attention of the market participants with 3.470 billion equities worth N40.791 billion traded in 34,364 deals, contributing 73.86 per cent and 47.97 per cent to the total trading volume and value, respectively.
The services sector followed with 407.032 million shares worth N2.226 billion in 4,996 deals, and the ICT space transacted 237.680 million stocks valued at N3.628 billion in 5,280 deals.
Business Post reports that 51 shares appreciated in the week versus 82 shares in the previous week, 39 equities depreciated compared with 18 equities a week earlier, and 62 stocks closed flat versus 52 stocks in the preceding week.
Multiverse was the best-performing stock with a a price appreciation of 53.42 per cent to N12.35, Honeywell Flour gained 31.67 per cent to close at N10.02, DAAR Communication expanded by 25.71 per cent to 88 Kobo, MTN Nigeria leapt by 21.00 per cent to N242.00, and NCR Nigeria soared by 20.66 per cent to N7.30.
On the flip side, Sunu Assurances was the worst-performing stock after it went down by 36.52 per cent to N7.30, Caverton shed 15.00 per cent to N2.38, Consolidated Hallmark slumped by 15.00 per cent to N3.40, RT Briscoe slipped by 14.33 per cent to N2.57, and Jaiz Bank depreciated by 10.77 per cent to N2.90.
At the close of business, the All-Share Index (ASI) and the market capitalisation gained 1.80 per cent to close the week at 105,451.06 points and N64.303 trillion, respectively.
Also, all other indices closed higher apart from the insurance, AFR Bank Value, AFR Div Yield, MERI Value, consumer goods, energy, and industrial goods, which depreciated by 6.91 per cent, 0.08 per cent, 1.11 per cent, 0.17 per cent, 0.34 per cent, 0.34 per cent and 0.26 per cent, respectively, as the ASeM closed flat.
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