FMDQ Releases OTC FX Futures Market Framework & Operational Standards

Share This Article
Share on facebook
Share on linkedin
Share on twitter
Share on email

FMDQ Releases OTC FX Futures Market Framework & Operational Standards. The release of the Revised Guidelines for the Operation of the Inter-Bank Foreign Exchange (FX) Market (the “Revised Guidelines”) by the Central Bank of Nigeria (CBN) on June 15, 2016 ushered in a new regime in the Nigerian FX market with the introduction of the Naira-settled OTC FX Futures as one of the approved products for hedging FX in Nigeria.

As a novel innovation in the Nigerian FX market, it became imperative for proper regulation to be introduced to provide adequate governance and to support the market structure articulated in the FMDQ OTC FX Futures Framework (the “Framework”). This Framework seeks to ensure that the product is applied to hedge legitimate foreign exchange risk exposures (i.e. backed by eligible trades/transactions with foreign currency obligations) and not as a mechanism for speculation.

The Framework is also designed to ensure all participants in the OTC FX Futures market have an understanding of the market features and modalities. Consequently, it provides a detailed description of the market features, and the market and operational structures, with the market structure highlighting contract tenors, stakeholders in the market and the adopted trading system, among others, and the operational structure focusing on the trading conventions, eligible margin collateral, margining process, and settlement process for maturing contracts.

Furthermore, in its capacity as the OTC FX Futures Exchange and market organiser, FMDQ OTC Securities Exchange (FMDQ) has developed the OTC FX Futures Market Operational Standards (the “Standards”) which outline the eligibility criteria for transactions to gain access to the OTC FX Futures market and the attendant documentation requirements; duties and obligations of the transaction counterparties (i.e. CBN and Dealing Member (Banks) [“DMBs”]), clients, as well as the Clearing Agent – the Nigeria Inter-Bank Settlement System PLC (NIBSS); trading standards and settlement process; margining requirements; conditions for externalisation of transaction proceeds by clients; and the penalties for breach of the Standards.

The ultimate objective of the Standards is to set out the guidelines for the effective administration of the OTC FX Futures market and support the mandate of FMDQ to promote transparency, liquidity, price formation and diversification in the Nigerian FX market.

The Standards, which received the endorsement of the CBN on July 27, 2016, were developed following extensive consultations with the CBN, DMBs and other stakeholders to assess the robustness of the embedded controls, the practicality of the Standards and alignment with the Revised Guidelines. The Standards shall be read in conjunction with the Framework, the Revised Guidelines, relevant CBN Circulars on the OTC FX Futures market and any FMDQ OTC Market Bulletin made pursuant to the Standards; and shall be reviewed periodically to ensure alignment with best practices.

Click here to view FMDQ OTC FX Futures Market Framework

Click here to view OTC FX Futures Market Operational Standards

 

FGN Bond Quotation & T.Bills Listing Ceremony

FMDQ Launch – Event Snapshot

 FMDQ OTC MD/CEO Interview with Opeyemi AgbajePress Interviews at FMDQ Launch

More Articles

FMDQ Exchange Admits Chapel Hill Denham Series 9 Nigeria Infrastructure Debt Fund on its Platform

FMDQ Exchange Lists Lagos State Government ₦19.82 billion Forward Ijarah Lease Sukuk on its Platform

FMDQ Exchange Admits Lionseal Industries Limited’s ₦10.00 Billion Commercial Paper Programme on its Platform

FMDQ-OXFO Partnership
With innovative technology and strategic partnerships we create a new value network and redefine the cost structure for homeownership so that more people
FMDQ Sustainability Agenda
FMDQ, through its activities, aims to achieve sustainability in the areas it actively operates and impacts, as such, its Sustainability Strategy is guided by five (5) main Sustainability Pillars…

Dear Subscriber,

Thank you for your interest in staying connected with us! Before proceeding, please take a moment
to read and acknowledge the terms and conditions below:

1. Privacy Policy: Your privacy is important to us. We will handle your personal information responsibly and in accordance with our Privacy Policy. You can review our Privacy Policy here.

2. Email Communications: By subscribing, you consent to receiving email communications from us. These may include newsletters, product and service brochures, and other relevant updates.

3. Subscription Confirmation: You will receive a confirmation email shortly. Please click on the provided link to confirm your subscription. This step ensures your interest in receiving emails from us.

4. Unsubscribe Option: Every email communication you receive will include an option to unsubscribe. If you ever wish to stop receiving our email communications, you can do so by clicking the “unsubscribe” link at the bottom of the email.

5. Age Verification: By subscribing, you confirm that you are 18 years old or the legal age of majority in your jurisdiction.

6. Frequency: We strive to send you relevant content without overwhelming your inbox. You can expect to hear from us [weekly/monthly/occasionally], depending on our content schedule

Please check the boxes below to confirm your consent.
If you have any questions or concerns about our terms and conditions, kindly contact us at
[info@fmdqgroup.com]

Report

Get access to industry data and reports

Report

Get access to industry data and reports

Report

Get access to industry data and reports

Report

Get access to industry data and reports