In June 2019, the Securities and Exchange Commission (SEC), in another unprecedented and forward-thinking market development posture, registered another depository, FMDQ Depository Limited (FMDQ Depository) in the Nigerian capital markets after the existence of a sole depository for over 26 years; thereby empowering issuers and investors with freedom of choice, value and enhanced service delivery.
Following its operationalisation in August 2019 and leveraging on active stakeholder engagements across the Nigerian capital market value chain, FMDQ Depository commenced delivering on its operational mandate to implement value-added products and service offerings; with FMDQ Group providing efficient listing and trading services through FMDQ Securities Exchange Limited (FMDQ Exchange) and the much-required risk management, clearing and settlement services through FMDQ Clear Limited (FMDQ Clear); offering market participants an unrivalled opportunity to experience enhanced liquidity and straight-through-processing.
With the support of market stakeholders, FMDQ Depository has successfully onboarded some of the choicest bonds onto its platform, with its appointment as a sole depository to the Lagos State Government ₦100.00 billion Bond, and more recently, as a joint depository to the Dangote Cement ₦100.00 billion Bond. The foresight of Lagos State Government in choosing FMDQ Depository for its most recent bond is an indication of the State’s alignment with progressive market development in Nigeria. Indeed, Dangote Cement PLC should also be commended as it has made history by giving investors power, for the first time in the Nigerian capital market, to determine which depository to lodge their assets with, thereby validating the SEC’s vision of diversification and healthy competition for the market, motivated by FMDQ’s global competitiveness agenda. As FMDQ Depository is not saddled with the administrative task of allocating the International Securities Identification Numbers (ISINs) and Legal Entity Identifiers (LEIs), the Depository will remain focused on building its core competencies, including efficient and value-added service delivery to market stakeholders, which is the crux of the depository service.
To ensure operational efficiency and facilitate ease of implementing investor’s choice of depository, FMDQ Depository had been advocating, right from its inception, for the SEC-registered central securities depositories (CSDs) in Nigeria to embrace operational collaboration towards promoting the global agenda for interoperability between their systems, thereby effectively empowering investors to deal on their Exchange of choice in Nigeria, irrespective of which depository their assets are held. Indeed, competition, they say, breeds innovation and this is no different as market players have commended FMDQ Group for taking up this mandate which provides participants a choice; and for continuing to drive innovative reforms to deliver world-class standards to the Nigerian financial market.
An investment banker from one of the leading financial advisory firms opined that, “it will take a while for market participants to fully dimension the significant value FMDQ Group has brought to the financial market ecosystem in Nigeria. With FMDQ’s focused GOLD Agenda for the market, it will certainly not be business as usual for the market operators.” With innovation at the core of FMDQ Group’s existence, the efficient and integrated linkage between FMDQ Exchange and FMDQ Depository guarantees seamless market making for all securities, including bonds and commercial papers (CPs), held on the FMDQ platform. In turn, investors are availed an unrivalled liquid market provided through the unmatched financial capacity of FMDQ Exchange’s Dealing Members (banks and non-bank financial institutions), credible price discovery from sizable market trades executed by these Members as well as world-class models, and real time refinance/repurchase opportunities provided as part of FMDQ’s market development agenda. In addition, issuers and investors will also benefit from FMDQ Depository’s credible asset servicing for the investments lodged with the Depository; secure and resilient processes and operations; and reliable data and information. Some of the other issuers currently benefiting from the complementary and unique depository services provided by FMDQ Depository include, Citibank Nigeria Limited, Eterna PLC, First City Monument Bank PLC – for their CP issuances – among others.
According to the Chief Executive Officer of FMDQ Group, Mr. Bola Onadele. Koko, “We are excited as we embark on another phase of implementing FMDQ’s GOLD Agenda – with the overarching objective of making the Nigerian financial market globally competitive, operationally excellent, liquid and diverse. FMDQ Depository completes the value chain of pertinent market infrastructure for the pre-trade, trade and post-trade spectrums provided by FMDQ Group – from listing to trading, clearing, settlement, asset servicing and data & information, amongst other services. With the support and collaboration of its stakeholders, FMDQ’s much sought after goal of delivering power of choice to the hands of the investors has been actualised and FMDQ Group remains committed to fostering prosperity to all its stakeholders, especially the issuers and investors, through FMDQ’s capital market value chain services.”
FMDQ Group is Africa’s first vertically integrated financial market infrastructure (FMI) group and a one-stop platform to commence and finalise all securities transactions activities in the Nigerian financial market in a seamless, timely and cost-efficient manner. The Group is positioned to provide end-to-end execution, clearing and settlement of financial market transactions, as well as data and information services, across the debt capital, foreign exchange, derivatives and equity markets, through its wholly owned subsidiaries – FMDQ Exchange, FMDQ Clear, FMDQ Depository and FMDQ Private Markets Limited.