FMDQ Chief Executive Officer Bola Onadele Koko in an interview with Arise Television gave his outlook for 2019, as well as markets the exchange intends developing this year
Foreign exchange outlook
In his view, the foreign exchange market is likely to be stable, and in the event of an adjustment, foreign exchange futures provide a hedge.
The Governor Godwin Emefiele has assured the market that the exchange rate will be stable. Even if there is a shift, he has put in place a product (foreign exchange futures) to make it stable for people.
Koko, however, stated that the interest rate would be difficult to predict due to upcoming elections.
The interest rate is going to be more difficult to predict, especially with the inflation, and spending on elections. Central Banks are expected to be proactive with inflation because if you allow it to go out of hand it will take you longer to arrest it.
Regarding the organization’s plans for 2019, Onadele stated the FMDQ would focus on 3 major areas, the repo market, enhanced activity on the derivatives market, as well a secondary market for bankers acceptances.
We want to put a repo market with collateral management. When a lender has given money and received assets as collateral, as those assets change in value, the borrower must keep topping it up and ensure that there is no risk to the lender. We will like to acitivate it this year.
Pushing the needle on derivatives
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We should be able to push the needle on derivatives this year. We would like to go into the treasury bills futures, the FGN Bond futures because all those products and asset classes deserve hedging as well.
A secondary market for bankers acceptances
We will look at bankers acceptances as well. This is an opportunity for banks to put their acceptances out there, and the whole market can see their bankers acceptances trade in the secondary market, and is a measure of their rating. It could also be linked to their time deposits.
The FMDQ CEO also stated that the dealing members market would take off fully in Q1.
FMDQ was registered by the Securities and Exchange Commission (SEC), as an over-the-counter (OTC) market in 2012, and launched in November 2013. It is concerned primarily with debt capital, currencies securities exchange as well as derivatives.