Transaction Fees Yield N1.6bn into FMDQ OTC Treasury

Debt capital market dealers on the platform of FMDQ plc boosted the Over-the-Counter (OTC) exchange revenue by about N1.6 billion paid as transaction fees last year, for using the OTC platform.

Products traded on the FMDQ platform include Forex, FX Derivatives, Treasury-Bills (T-Bills), Bonds (FGN Bonds, Eurobonds and other Bonds), Money Market (Repurchase Agreements, Buy-Backs and Unsecured Placements/Takings) and Money Market Derivatives.

With less than two years after its November 2013 launch, analysts are of the opinion that the stellar performance of FMDQ along with the variety of products at the disposal of investors on its platform, further deepen the capital market, thereby providing an alternative platform for investors, in addition to the Nigerian Stock Exchange (NSE).

This is evidenced in the growing interest in corporate listings of bonds, commercial papers (CPs) and other derivatives on this OTC platform; a development which further justifies earlier yeaning for such market by investors and financial market dealers.

The OTC debt capital was registered by the Securities and Exchange Commission (SEC) in 2012 as a securities exchange and self-regulatory organisation (SRO), and it brings together Nigeria’s fixed income and currency operations under a single market governance structure.

Transaction fees on its platform accounted for circa 91% of the total revenue of N1.75bn, representing a 1,992% increase against N155.6million in 2013. There were 26 FMDQ licensed dealing members as at December 2014, its annual report and accounts for the year ended December 31, 2014 available to BusinessDay shows.

Interest income, income from membership application fees and annual dues, sponsorships and a grant income, accounted for the balance of the revenue of the OTC exchange of the Debt Capital Market which also emphasises its commitment to focus on key business development initiatives to improve market liquidity, transparency, credibility and integrity, “which will in turn improve our revenue and ensure self-sustainability.”   

“To ensure FMDQ continues to maintain its self-sustainability goal, management, during the year developed revenue generating initiatives around memberships, quotation of debt instruments and bond listings,” said Bola Onadele.Koko, Managing Director/Chief Executive Officer, FMDQ OTC PLC.

Koko said: “as a securities exchange positioned to bring about revolutionary change in the Nigerian Debt Capital Market (DCM), our listings and quotations business development efforts commenced in earnest following the regulatory approvals of our Commercial Paper (CP) Quotation Process and Rules by the Central Bank of Nigeria (CBN), and our bond listing and quotation rules by SEC.

“ The development of the CP Quotation Process and rules in October 2014 paved the way for the enhancement of transparency and governance at the short-end of the corporate yield curve.” 

Sarah Alade, chairman, FMDQ OTC plc said that in 2014, “FMDQ achieved unprecedented transparency in the OTC fixed income and currency markets and equally positioned itself to offer value-added services to the listing of bonds in Nigeria by achieving the approval of its bond listing and quotation rules by the Securities and Exchange Commission.

“Key growth priorities for 2015 include market development and governance; and integration of clearing and settlement systems for straight-through-processing. By implementing these strategic initiatives, FMDQ is set to further improve price discovery and transparency, avail market participants top quality research information/data, foster continued integration of the markets, promote stakeholder education and sustain investor confidence” she further said at its 3rd Annual General Meeting (AGM).

“As a securities exchange, we look forward to delivering innovative and value-adding solutions to our stakeholders and providing a safe and credible platform for our customers to list, quote and trade securities,” Alade  who is also the deputy governor in charge of the Economic Policy Directorate of the Central Bank of Nigeria (CBN) said.