Investors Trade N49trn Fixed Income Securities in Six Months

By Goddy Egene

Investors staked a total of N48.72 trillion on fixed income securities and currencies on the FMDQ OTC Securities Exchange between January and June 2016.

According to statistics obtained by the THISDAY, N22.5trillion   was invested in the first quarter of 2016, N9.43trillion in April,  N7.43trillion in May and N9.36trillion in June, amounting to N48.72trillion in six months.

A breakdown of the performance in June showed that activities in the Treasury bills (T.bills) market remained dominant, accounting for 38.14 per cent  of total turnover while Secured Money Market (Repurchase Agreements (Repos)/Buy-Backs) came second place, accounting for 26.5 per cent.

 Total Foreign Exchange (FX) market transactions accounted for 26.07 per cent, while Federal Government of Nigeria  FGN bonds and Unsecured Placements/Takings accounted for 4.85 per cent  and 4.34 per cent of the total turnover respectively.

FMDQ explained that milestones were recorded in the FX market as the Central Bank of Nigeria (CBN) took steps to restructure the market.

“The apex bank released revised guidelines for the FX market, effectively liberalising the market, and appointed Foreign Exchange Primary Dealers (FXPDs). Furthermore, in a very bold and decisive move, the CBN cleared the backlog of transactions in the market via a one-time Special Secondary Market Intervention Sales (SMIS) auction. Accumulated backlog totalling $4.02 billion, was cleared with $0.53 billion (13.24 per cent) settled spot and the remaining 86.76 per cent ($3.49bn) spread over one  to three  months forward contracts,” it said.

The exchange added that on June 27, Naira-settled OTC FX Futures product was also introduced into the Nigerian FX market with the CBN as the pioneer seller. “The CBN offered twelve (12) consecutive monthly contracts with initial notional amounts of $1.00bn each. OTC FX Futures Contracts totalling $38.80 million were executed by the end of the month,” the exchange said.

  Based on the reform  in the market by the CBN, transactions in the FX market settled at $7.51 billion in June,  an increase of 83.82 per cent compared with the value recorded in May.

Turnover in the fixed income market settled at  N4.02trillion, showing increase of 2.05 per cent  above the previous month’s value, with transactions in the T.bills market accounting for 88.71 per cent of the turnover.

 Outstanding T.bills closed the month at  N5.28 trillion whilst outstanding FGN bonds increased 1.73 per cent to close at  N6.57 trillion. Trading intensity in the Fixed Income market settled at 1.24 and 0.07 for T.bills and FGN bonds respectively, with maturities between one month to three months  being the most actively traded  in June.