The Coronavirus pandemic (COVID-19) has not only affected governments, communities and families but has impacted global economies, bringing about unprecedented market uncertainties and fluctuations, thereby making the management of volatilities, such as market, credit, foreign exchange (FX), become increasingly imperative for the continued survival of businesses.
In view of the foregoing, FMDQ Securities Exchange Limited (FMDQ Exchange or the Exchange) is set to host a live webinar for stakeholders of the Nigerian financial market to discuss the very important topic – Combating Currency Exchange Volatility through Risk Management Tools. This webinar, which is scheduled to hold via Zoom Cloud Meetings on Wednesday, June 17, 2020, from 12:00 noon (West African Time), will provide an opportunity for market participants, including Nigerian corporates, foreign portfolio investors (FPIs), foreign direct investors (FDIs) and other investors, to improve their knowledge of derivatives products, demystify the concept of hedging their FX exposures in the Nigerian financial market, and further, understand the application of the OTC FX Futures product as a crucial risk management tool in achieving this. Managing risks and the volatilities presented by the current crisis cannot be overemphasised as they are a critical measure for business continuity at such a time as now and beyond, and businesses/individuals with interests across global markets must acknowledge, anticipate, and effectively manage these risks to enhance efficient financial planning and operations.
In 2016, the Central Bank of Nigeria (CBN), in collaboration with FMDQ Holdings PLC (FMDQ Group or FMDQ), introduced the Naira-settled OTC FX Futures product to minimise the disequilibrium in the spot FX market and provide a means for businesses to manage their FX exposures towards achieving exchange rate stability. In keeping with its commitment to the stability of the foreign exchange market, the apex bank, as the pioneer seller of contracts in the market provides quotes for contracts ranging from 1-month through to 60-month contracts (that is, maturities extending up to five (5) years), bringing the total number of open contracts in the market at any one time to sixty (60). As at May 2020, the market has recorded over 47 contracts maturities (totalling over $33 billion) with over $46 billion worth of FX Futures so far traded on FMDQ Exchange since its inception. With no settlement default so far, the attendant clearing and settlement of the product continues to be facilitated by FMDQ’s clearinghouse subsidiary, FMDQ Clear Limited.
As Africa’s first vertical financial market infrastructure (FMI) group, FMDQ is set to launch a derivatives market in the Nigerian financial market as part of its commitment to the continuous introduction of innovative and dependable capital market solutions to tackle the challenges presented to the markets, towards making it resilient and globally competitive.
FMDQ Group provides a one-stop platform for the seamless and cost-efficient execution, risk management, clearing, settlement and depository services, as well as data and information services across the debt capital, FX and derivatives markets in Nigeria.