FMDQ to promote financial security in OTC market

The FMDQ OTC Plc has given an assurance to stakeholders that it will work towards enhancing financial security in the over-the-counter market.

The Managing Director, FMDQ OTC, Mr. Bola Onadele, gave the assurance in Lagos on Tuesday, ahead of the inauguration of its trading platform, which is scheduled to take place on November 7.

According to him, the FMDQ OTC will also help to boost the real sector and Small and Medium Size Enterprises.

Onadele, who noted that it would be difficult for an SME to raise funds from the platform, through a bond for instance, said the FMDQ OTC would work with various organisations to ensure that SMEs found opportunities on the platform.

He said, “We intend to work with SMEDA and other agencies to design products for the SMEs.”

He said the platform was not just about trading but “about strengthening the real sector.”

Explaining how the platform would ensure financial security in the OTC market, he said various measures had been put in place to ensure that, among other things, the FMDQ OTC was transparent and fully regulated.

He said, “Transparency is a major issue in the OTC market. It is going to be our prime objective to improve transparency in the market and we are looking at technology options to achieve that.”

Licensed by the Securities and Exchange Commission in 2012 to function as an OTC market, the FMDQ OTC is owned by 25 banks, the Central Bank of Nigeria, Finance Dealers Association and the Nigerian Stock Exchange.

According to Onadele, the FMDQ OTC is a securities exchange for listing and trading of fixed income products and plain-vanilla interest rate as well as currency derivatives to offer financial security.

He added that based on its licence, it would act as a self-regulator of members’ activities and conduct in order to protect end users.

Stressing that it had become important to better regulate the OTC market in the light of its role in the crash witnessed in the market a few years ago, Onadele explained that OTC would also boost market liquidity and credibility.

He said, “The existing inter-bank fixed income and currency markets: Money, Repo, Open-Buy-Back, Commercial Paper, Treasury bills, FGN bond and FX will be accorded stronger governance to improve market liquidity and credibility.”

Apart from providing a centralised platform, where the interests of issuers of securities, sellers, trading members, investors and other end-users will integrate, the FMDQ OTC has several other responsibilities.

For instance, it is expected to promote the listing of fixed income securities as well as develop credible benchmarks, indices and forewarning system of market risks.

Onadele said while the FMDQ OTC would focus on market transparency in 2013, it would boost trading intensity in 2014 and product diversification in 2015.

The focus would shift to integration with external financial markets and strategic unbundling for greater impact from 2016 to 2018, he added.