FMDQ Launches Market for Fixed Income Trading

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FMDQ Launches Market for Fixed Income Trading

Nigeria’s foremost debt capital, foreign exchange and derivatives over-the-counter (OTC) securities exchange, FMDQ OTC Securities Exchange has launched what it called ‘Dealing Member (Specialists) Market’ for trading in fixed income with banks in the Nigerian debt capital market.

The FMDQ, in its December 2018 newsletter, said the launch was in line with its agenda to foster market integration, improve network effects and promote liquidity in the Nigerian financial markets.

It said the market development initiative came on the back of the fragmentation identified in the fixed-income market.

According to the FMDQ, the market will provide seamless integration of the fixed income inter-bank market and the securities dealers that are members of the newly created membership category.

It said, “The DMS category is a subset of the FMDQ Dealing Member category, which also warehouses the Deposit Money Banks, and is made up of securities dealers, including investment banking firms, securities trading/stockbroking firms and OTC fixed income dealers.”

It noted that the dealers must be licensed to make the market in all fixed income products admitted for trading on the FMDQ platform.

The Newsletter also reads that “In the last three years, we have worked with the Securities and Exchange Commission (SEC) and market participants to create the DMS market, and this new market affords the SEC-registered, Nigerian Stock Exchange (NSE) as well as FMDQ dealers the opportunity to trade together in a liquid fixed income market operated by banks.

“These banks are the founding members of the FMDQ. The participation of DMSs in the Nigerian fixed income market will not only enhance liquidity but also serve as an efficient channel for the FMDQ to integrate retail participants into the Nigerian fixed income market.

“Furthermore, in a first-time move, the banks have committed to support the DMS market with trading liquidity by accepting to provide two-way quotes to the DMSs, whereas FMDQ Clear Limited will act as the clearing house for the market and Stanbic IBTC Bank Plc as the settlement bank.”

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