Turnover on FMDQ market rose 90.05% YoY to N41.23trn in October
Bamidele Famoofo
Total secondary market turnover recorded on FMDQ Exchange in October 2024 was ₦41.23trilion, representing a MoM increase of 14.54 per cent (N5.23trn) and a YoY increase of 90.05 per cent (N19.53trn) from September 2024 and October 2023 figures, respectively.
Foreign Exchange (FX) and Money Market (MM) transactions dominated secondary market activity, jointly accounting for 75.74 per cent of the total secondary market turnover in October 2024.
In the primary segment of the market where sovereign securities are traded, the Debt Management Office (DMO) sold treasury bills valued at N456.57billion across its auctions in October 2024, representing a 26.68 per cent (N166.17bn) MoM decline in the value of T-bills sold across its auctions in September 2024 (N622.74bn).
Conversely, the DMO sold FGN Bonds worth N289.60billion in October 2024. This marked a 9.48 per cent (N25.07bn) MoM increase on the amount sold in September 2024 (N264.53bn). Sovereign securities offered by the DMO in its FGN Bond and T.bills auctions were oversubscribed by 116.29 per cent and 67.14 per cent, respectively, during the review period. In October 2024, the CBN sold OMO Bills worth N731.14billion, representing a 2.33 per cent (N16.64bn) uptick on the amount sold in September 2024 (N714.50bn).
There were no new listings and redemptions of Non-Sovereign Bonds listed on FMDQ Exchange in October 2024, the value of Non-Sovereign Bonds outstanding were N2,240.32billion. The total value of CPs quoted on FMDQ Exchange in October 2024 was N30.58billion, representing a MoM decrease of 20.61 per cent (N7.94bn) in the value of CPs quoted in September 2024 (N38.52bn). In October 2024, quoted CPs was issued by institutions from the Agriculture (4), Financial Services (1), and the Retail (2) sectors. The outstanding value for CPs decreased MoM by 9.23 per cent (N57.50bn) to N565.28billion in October 2024 due to the N88.08billion worth of CPs that matured during the review period.
Total spot market turnover for all products traded in the secondary market in October 2024 was N36.75trillion, representing a MoM increase of 9.40 per cent (N3.16trn) from September 2024 figures. The MoM increase in total spot market turnover was driven by the increase across the FX, MM, and FI turnover by 8.49 per cent (₦1.28trn), 10.76 per cent (N1.01trn), and 9.50 per cent (N0.87trn), respectively. The increase in MM turnover was driven solely by the MoM increase in the Repos/Buy-backs product category. The increase in fixed income turnover was driven by the MoM increase across the T.bills, OMO Bills, and FGN Bonds product categories, whilst turnover in the Other Bonds category decreased, and CBN Special Bills remained inactive.
Spot FX market turnover was $10.08billion (N16.36trn) in October 2024, representing a 6.58 per cent ($0.62bn) MoM increase from the turnover recorded in September 2024 ($9.46bn). In the FX Market, the Naira depreciated against the US Dollar, with the spot exchange rate ($/N) increasing by 2.38 per cent ($/N38.82) to close at an average of $/N1,631.71 in October 2024 from $/N 1,592.89 recorded in September 2024. Further, exchange rate volatility continued into October 2024 as the Naira traded within an exchange rate range of $/N1,552.92 – $/N1,675.49 compared to $/N1,539.65 – $/N1, 6667.42 recorded in September 2024.
Spot fixed income market turnover in October 2024 was N10.00trillion, representing a MoM increase of 9.50 per cent (N0.87trn) from the turnover recorded in September 2024 (N9.13trn). The MoM increase in turnover was driven by the increase in T.bills, OMO Bills, and FGN Bond transactions during the review period. In October 2024, the trading intensity (TI) for T.bills and FGN Bonds remained unchanged.
The sovereign yield curve experienced a 3.64ppts MoM decrease in yield spread1 to -4.09ppts in October 2024, depicting the steepening of the yield curve. (See Chart 11) In October 2024, one (1)-year real (inflation-adjusted) yields in Nigeria remained negative (-9.86%) and recorded the lowest value compared to selected emerging markets.
Spot Market – (Money Market) Total turnover in the MM segment increased MoM by 10.76 per cent (N1.01trn) to N10.39trillion in October 2024. The MoM increase was driven by the 10.84 per cent (₦1.01trn) increase in Repos/Buy-backs. The average O/N rate and OPR rate (secured lending rate) increased MoM by 2.78ppts and 2.92ppts, respectively, to close at an average of 30.99 per cent and 30.59 per cent in October 2024.
Derivatives Market Total turnover in the FX derivatives segment in October 2024 was $2.76billion (₦4.48trn), representing a MoM increase of 83.19 per cent ($1.25bn) from September 2024 figures ($1.51bn). The MoM increase in the FX derivatives turnover was driven by the 98.08 per cent ($1.28bn) increase in FX Swaps, offsetting the 15.63 per cent ($0.03bn) decline in FX Forwards transactions, whilst the FX Futures market remained inactive during the review period.
In the Cleared Naira-Settled (USD/NGN) Non-Deliverable Forwards market, the near month contract (NGUS OCT 30, 2024) expired and open positions with a total notional value (NV) of $0.005bn were settled. No new far month (60M) contract2 was introduced in the Cleared Naira-Settled Non-Deliverable Forwards market in the review period, continuing the trend since August 2023. Consequently, the TTM of the farthest open contract is forty-six (46) months (i.e., NGUS AUG 30, 2028 contract). As a result, the cumulative NV of open Cleared Naira-Settled Non-Deliverable Forwards contracts decreased slightly to $0.104bn as at October 31, 2024, representing a MoM and YoY decrease of 4.59 per cent ($0.005bn) and 97.50 per cent ($4.06bn).
The average modeled forward rates for the long-term (i.e., 37M – 60M) Cleared USD/NGN Non-Deliverable Forwards contracts in October 2024 were higher than those for September 2024 across all tenors. Likewise, the indicative rates for short-term (i.e., ≤12M) Non-Deliverable FX Forwards contracts in October 2024 were higher than indicative rates for September 2024 across all tenors.