$10.38bn worth of OTC FX Futures traded on FMDQ as 18th Contract Matures

Investors and Exporters popularly known amongst traders as the I & E Window, has exchanged $10.38bn worth of future contracts as a hedge against the volatility of the foreign exchange markets in Nigeria, that has being beset by instability of oil prices, rising budget deficits, degraded credit rating and instability in the socio economic environment. Investors. Nigeria, being an import dependent country relies on the wholesale dutch auction system of the Central Bank of Nigeria known at the Nigeria Autonomous Foreign Exchange Fixings to get prices for foreign currency supply that is used to import everything from rice, oil, raw materials for manufacturing, spare parts, groceries, household staples.

In a statement released by FMDQ (The OTC market platform for settlement of these contracts), it says “As it has been the norm for seventeen (17) maturities on FMDQ, the OTC FX Futures Exchange, the 18th OTC FX Futures contract matured and settled successfully on December 27, 2017. Having ceased trading on December 20, 2017, in line with the OTC FX Futures Market Operational Standards, the 18th OTC FX Futures contract, NGUS DEC 27 2017, with notional amount $499.20 million, matured and settled on FMDQ. This brings the total value of contracts so far matured on FMDQ to $7.35 billion.

Central Bank of Nigeria is listing the 19th Contract on FMDQ OTC platform, NGUS due to mature on the 26th of December 2018, for $1.00 billion dollars at $/₦362.84 as replacement for the matured 18th contract.

FMDQ in its annual newsletter says its top 10 dealing member banks for the year ended January to November 2017 are:

Rank             Dealing Member (Bank)

  1.              Stanbic IBTC Bank Plc
  2.              Access Bank Plc
  3.              Ecobank Nigeria Limited
  4.              United Bank for Africa Plc
  5.              Standard Chartered Bank Nigeria Limited
  6.              First Bank of Nigeria Limited
  7.              Diamond Bank Plc
  8.              Citibank Nigeria Limited
  9.              Union Bank of Nigeria Plc
  10.              Guaranty Trust Bank Plc

The top ten (10) Dealing Member (Banks) accounted for 71.72% (₦93.36 trillion) of the overall turnover in the market, with the top three (3) accounting for 48.73% (₦45.49 trillion) of this sub-section of the market. Stanbic IBTC Bank PLC, Access Bank PLC and Ecobank Nigeria Limited. topped the League Table, ranking 1st, 2nd and 3rd respectively, in the value traded for the overall over-the-counter (OTC) market, maintaining their position in the League Table as the top three (3) banks for eight (8) consecutive months.
The other Dealing Member (Banks) maintained their positions on the League Table with the exception of Citibank Nigeria Limited and Diamond Bank PLC, which swapped positions to now occupy 7th and 8th places respectively.
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Kelvin Emmanuel

About Kelvin Emmanuel

The Oil producing Angola in the Southern part of Africa faces what Nigeria faced 12months ago; a distortion in its exchange rate with a difference between the official markets and the parallel black markets. One dollar through the official window buys you 166 kwanza, while one dollar through the black market buys you 400 kwanza. Nigeria faced the same challenge 12months ago, when the distortion between the official and black markets was as much as the official markets trading at 306 with the parallel market ranging from 450 through to 510. The Central Bank Governor of Angola, Jose de Massano Junior announced in Luanda “We will stop having a fixed foreign exchange, we will adopt a floating regime of foreign exchange”. Angola faces exactly the same challenges and has been applying the exact same responses to an exchange rate crisis like using its foreign reserves that was sitting at $26bn to defend the currency kwanza, with no success so far, even though the external reserves has dropped to $14bn. Angola relies on Oil receipts for 80% of its government revenue, 90% of its inflow and 50% of its GDP. Angola is a $194bn economy that has been growing at an average of 10% on the back of rising oil prices since 2002 when its 27 year old civil war that started in 1975 ended. The state national oil company Sonangol reports that it produces up to 1.8m barrels of crude oil daily, however the government that until now has being led by the family dynasty Jose Eduardo dos Santos until recently when succession saw power transferred to Joao Lourenco, reports that the oil price rout in 2015/2016 that saw prices drop to as low as $28 per barrel caused ripples across the economic structures of the government, upsetting government revenues, its ability to fund its budget, capital project funding, foreign direct investments into the economy as a result of a currency crisis that was driven by the widening of gap between the official and street window of the kwanza, that until now has been pegged in a fixed exchange rate regime to the US Dollar.