What is FMDQ OTC PLC?
What does FMDQ stand for?
The FMDQ stand for Financial Markets Dealers Quotes (FMDQ), and OTC stand for Over-The-Counter (OTC)
and the PLC stand for Public Limited Company (PLC).
The FMDQ OTC PLC is the only licensed operator of the securities and derivatives exchange (e.g. Bonds, Treasury Bills, Commercial Paper, treasurers of banks, etc.) of FMDQ OTC Market in Nigeria, Africa.
FMDQ OTC was created by the Financial Markets Dealers Association (FMDA) formerly known as the Money Market Association of Nigeria
(MMAN) in 2009 and on Thursady 6th January 2011 was granted the licensed operator of the FMDQ Over-The-Counter Market
FMDQ OTC is sponsored by Bank of Nigeria (CBN) with the Nigeria Deposit Insurance Corporation (NDIC) and all the banks and discount houses operating in Nigeria as its members.
In November 2012, FMDQ was registered by the Securities and Exchange Commission (SEC) as an OTC market securities exchange, and launced onto the Nigerian financial markets and institutions in Novermber 2013, 8 years to date, to brings together Nigeria's fixed income (money, treasury bills, bonds), derivatives and currency operations under a single market governance structure.
The idea of an OTC securities exchange was to create an enabling system for bringing Nigeria's thin, dispersed yet high-potential OTC market
under a single governance agreement.
FMDQ is a platform for fixed income and currencies. When we talk about Fixed Income (i.e., Money, Bonds, Treasury Bills, Commercial Paper, Bonds, Repos), Currencies (i.e., foreign exchange) and Derivatives.
The creation of FMDQ marks a landmark in the development of the Nigerian financial markets as it uniquely combines functions of a securities exchange in organising and deepening the OTC markets;
And a self-regulatory organisation (SRO) in coordinating and regulating the activities of the members in the markets under its governance.
In summary, FMDQ's primary focus is on the OTC markets and two other main responsibility: 1. Organized the Nigerian financial markets and 2, to regulates the market transparency for the benefit of financial markets and investors around the world.
In Collaboration with
Proudly Celebrates the Launch of the
"FMDQ PRICE TICKER TAPE ON CHANNELS TV"
Date: Thursday 25th February 2016
Time: 10:00 AM
Venue: FMDQ OTC securities Exchange
FMDQ OTC Partners With ChannelsTV
The FMDQ OTC Securities Exchange in partner with Channels Television launched the FMDQ OTC ChannelsTV Price Ticker Tape in Lagos.
On Thursday 25th February 2016, FMDQ OTC signed a partnership agreement with the Live Channels Television ChannelsTV with websites: www.channelstv.com /m.channelstv channeltv mobile or channelstv.com to shows Market Trading Data Live & Closing Prices on All Business Shows, News Track, Business Morning, Capital Market and Business Incorporated.
In Nigeria West Africa, channelstv nigeria won ten consecutive years (10th time in a roll) Best Television Station Service in Nigeria of the year and FMDQ have chosen Channelstv News www.channelstv to show FMDQ Price Ticker Tape Headlines
Business and market news channel like CNBC, FMDQ hoped the launch, which was attended by the FMDQ OTC Securities Exchange and Channels Television officials, seeks to increase the coverage of Nigerian Business and Market News especially Bonds, Treasury Bills and Currency Trading.
Over the past 25 years, Channels TV has established itself not just as a news leader, but also as a leader in Business News. ChannelsTV has a reach of over 20 million viewers and international coverage and has a wide reach in Business, Politics and Entertainment.
Mr Onadele Koko - The Managing Director (MD) & Chief Executive Officer (CEO) of the FMDQ OTC Securities Exchange and Mr. John Momoh - the Executive Chairman & CEO Channels Media Group, believed that the joint partnership would help Nigeria's financial market enormously.
FMDQ OTC Securities Exchange Markets
FMDQ is the leading revolution in the Nigerin debt capital market, bond listing, Commercial paper, list,
quote and trade on fmdq and the fixed income trading. As well as fixed income mutual funds, short-term notes,
commercial papers and bonds.
FMDQ is to be an influential self-regulatory body that is a reference point for credible economic information, committed to people and market development.
The objectives of the FMDQ vision were as follows:
- To build economic research capabilities
- To develop infrastructure and promote conditions necessary for market deepening
- To establish a body that will regulate the entire profession
- To influence public opinion and government policies
- To promote ethical conduct and enhance the skills and competencies of members to global standards
FMDQ the Game Changer
FMDQ List of Shareholders' Information
FMDQ was an initiative spurred out of the necessity to empower the Nigerian OTC financial markets to be globally competitive.
FMDQ as a company is owned by the CBN, FMDA, NSE Consult Limited ( a fully owned subsidiary of The Nigerian Stock Exchange) and as well as 24 banks and discount houses operating in Nigeria.
- Access Bank PLC
- Associated Discount House Limited
- Central Bank of Nigeria
- Consolidated Discounts Limited
- Diamond Bank PLC
- Ecobank Nigeria Limited
- Enterprise Bank Limited
- Express Discount House Limited
- Fidelity Bank PLC
- Financial Markets Dealers Association
- First Bank of Nigeria Limited
- First City Monument Bank Limited
- FSDH Merchant Bank Limited
- Guaranty Trust Bank PLC
- Kakawa Discount House Limited
- Keystone Bank Limited
- Mainstreet Bank Limited
- NSE Consult Limited
- Skye Bank PLC
- Stanbic IBTC Bank PLC
- Standard Chartered Bank Nigeria Limited
- Sterling Bank PLC
- Union Bank of Nigeria PLC
- United Bank For Africa PLC
- Unity Bank PLC
- Wema Bank PLC
- Zenith Bank PLC
The Securities and Exchange Commission, registered FMDQ to function as an OTC market, thereby giving FMDQ dual responsibilities of being
a securities exchange (a market organiser and service provider).
The development of the business will focus on the value created for the stakeholders and FMDQ's ability to influence the issuers, investors and the members towards ensuring market liquidity.
The FMDQ's core business functions and areas that present long-term value opportunities are as follows:
FMDQ - An OTC Market Securities Exchange
- Listings and Quotations - FMDQ intends to provide listing and quotation services to issuers
wishing to ensure liquidity and visibility of their fixed income and money market securities.
- Market Development - To drive the GOLD agenda of the Nigerian OTC market, FMDQ acts as the
springboard for product innovation and design of robust market architecture.
- Market Services - Accurate and timely prices and market data are supplied to stakeholders
further ensuring market liquidity and transparency.
- Technology - FMDQ, in partnership with key technology solution providers, deployed trading
and market surveillance systems that are fit-for-purpose to improve market liquidity, integrity and credibility.
- Trading - FMDQ provides a platform for the Dealing Members to execute secondary market trades in the most efficient manner either by quoting to other Dealing Members via the trading systems or obtaining best execution prices through the brokers.
FMDQ NIBOR FAQ
(Frequently Asked Questions)
About Securities Exchange
There are too many buzzwords to do with fmdq nibor. For instances: what is nibor?, Nibor rente? or Nibor 3? or
Nibor rates or Nibor rate today? or Nibor 2020? Nibor 2019? Nibor 2018? etc..
Or even nibor 3 mnd or 3 mnd nibor, nibor 6 mnd or nibor 12 month. You get the picture?
The FMDQ OTC money market, has set out its reform of the Nigerian Inter-bank Offered Rate (NIBOR) in compliance with the Principles for Financial Authority of the International Organisation of Securities Commissions (IOSCO).
The reform is centred on enhancing and formalising the NIBOR process towards strengthening its credibility as a money market authority.
- 1. How do top corporate and banks use NIBOR in pricing floating rate contracts?
A floating rate contact is an investment or loan instrument whose interest payment is tied to some variable (floating) interest rate benchmark.
The coupon or interest amount fluctuates according to the rise or fall in the market interest rates.
NIBOR was established as a standardised authority for the pricing of such floating rate contracts in Nigeria.
The parties to the contract agree on a specific benchmark tenor (e.g. 3-month NIBOR or 3 mnd nibor or Nibor 3) and the specific day to make reference to the benchmark.
On the agreed date, the applicable benchmark rate is used to derive the coupon/interest payment on the contract.
- 2. How does FMDQ as the NIBOR administrator ensure the Reference Banks take their responsibility seriously?
FMDQ has established a NIBOR Code of Conduct which was executed by each Reference Bank.
The NIBOR Code of Conduct is a guide on the behaviour of the Reference Banks. It formalises a proper governance process with the Reference Banks committing in writing to the adherence to its content.
This includes the responsibilities assigned to the relevant administrator and the Reference Bank with respect to the NIBOR determination process; the eligibility criteria for the inclusion and exclusion of Reference Banks to the panel of contributors;
The processes to determine benchmark rates; which bid and offer rates will be submitted, minimum compliance, internal audit, data archiving and staff training requirements.
- 3. How is NIBOR Determined?
NIBOR is a "trimmed arithmetic mean" of some of the Reference Banks' submissions.
Quotes from outliers (highest and lowest quotes) are removed and the rest is averaged.
The result for each benchmark tenor will be derived to four decimal places and published to the market at approximately 12:00 noon daily.
- 4. How many NIBOR tenors are published?
From Wednesday 23rd April 2014 only four NIBOR tenors: Overnight, 1 month, 3 months and 6 months will be published in the Newspapers and ChannelsTV as part of the FMDQ Daily Quotations List (DQL) and on FMDQ OTC PLC (FMDQ) website: www.fmdqotc.com
- 5. How would FMDQ ensure NIBOR meets the Principles for Financial Benchmarks issued by the International Organisation of Securities Commissions (IOSCO)?
FMDQ aims to ensure NIBOR has three major attributes - credibility, confidence and integrity - by bringing together strong regulatory and governance framework.
To this end FMDQ has established governance steps around the NIBOR submission process by using a new Secure File Transfer Protocol (SFTP) service for Reference Banks' daily submissions of NIBOR.
FMDQ will also implement a new post-publication surveillance system; designed and tested to assess the credibility of NIBOR submissions and rates.
Furthermore, FMDQ will articulate and implement requisite policies and framework addressing internal controls, information security and governance of the NIBOR to ensure the benchmark is in full compliance with the IOSCO principles.
Finally, FMDQ will subject the whole NIBOR process to regular external audits, and the resultant audit reports along the lines of the IOSCO principles will be published.
- 6. Is NIBOR the only Fixing in the Nigerian OTC financial markets?
NIBOR is not the only Fixing in the Nigerian OTC market.
NIBOR is the money market benchmark with two other Fixings in existence for Treasury bills and Foreign Exchange: NITTY - Nigerian Inter-bank Treasury bills' True Yields and NIFEX - Nigerian Inter-bank Foreign Exchange Fixings respectively.
However, FMDQ, will from time to time, review the market's need for other benchmarks and introduce same in compliance with international best practices.
- 7. What is NIBOR?
The Nigerian Inter-bank Offered Rate (NIBOR) represents the short term lending rates of selected banks in the Nigerian inter-bank market quoted as annualised rates.
NIBOR is a "polled" rate, meaning that a set of selected banks known as "Reference Banks" submit quotes which are processed to give NIBOR.
- 8. What is NIBOR used for?
NIBOR is an essential component of the Nigerian financial system.
It is use as a floating rate index for financial contracts i.e. money market instruments, retail loans, long-dated mortgages, bonds and interest rate derivatives.
- 9. What is the NIBOR Philosophy?
Reference Banks are required to submit rates in answer to the NIBOR question:
"At what rates could you borrow and lend funds, were you to do so by giving inter-bank bids and offers in a reasonable size just prior to 11 am?"
Whilst Reference Banks submit bid and offer quotes, only the offer quotes are published as NIBOR.
Quotes shall apply to unsecured inter-bank transactions in a 'reasonable size'.
'Reasonable size' for the purpose of NIBOR submissions is trade size between N2bn - N5 bn.
Although Reference Banks are advised to use transaction data to anchor their submissions, having a polled rate is crucial to ensure the continuous publication of such a systemic benchmark,
Even in times when liquidity is low and there are few transactions on which to base the benchmark.
- 10. What will happen in case of non-availability of some NIBOR data from Reference Banks?
Under normal conditions, at least 80% of the Reference Banks must quote to establish NIBOR.
In the highly unlikely event that less than 80% of Reference Banks are able to quote, FMDQ will establish NIBOR as soon as it can collect quotes from at least 5 Reference Banks and derive NIBOR by a simple average without eliminating outliers.
FMDQ shall at regular intervals from 12:00 noon indicate the delay on the page where NIBOR should be displayed in such case.
If fewer than 5 Reference Banks have provided data by 12:30PM, NIBOR rates of the previous business day will be republished at 12:30 PM and used as the NIBOR rates for that day.
Any republished rates from the previous business day shall be clearly identified as such by FMDQ on the page where NIBOR is displayed.
- 11. Where can I find current and historical NIBOR rates?
FMDQ is the primary publisher of the NIBOR Rates Nigeria, though it continues to be available via third party re-distributors.
Daily NIBORS can be found at www.fmdqotc.com whilst historical NIBOR data is available on http://www.fmdqotc.com/historical-data/fixings/
- 12. Who are the NIBOR Reference Banks?
The ten NIBOR Reference Banks are:
- Access Bank PLC
- Diamond Bank PLC
- Ecobank Nigeria Ltd.
- Fidelity Bank PLC
- First Bank of Nigeria Ltd.
- First City Monument Bank Ltd.
- Guaranty Trust Bank PLC
- Skye Bank PLC
- United Bank for Africa UBA PLC
- Zenith Bank PLC
- 13. Who are Dealing Members?
These are the FMDQ licenced members that make market on money market, currencies and debt securities traded OTC on the FMDQ platform.
Dealing Members must be registered with the Securities and Exchange Commission to carry on business as OTC Dealers. There are currently 26 FMDQ-licenced Dealing Members and increasing...
- 14. Who are the Specialist Dealing Members?
These are the FMDQ-licenced Dealing Members that have their trades cleared and settled by an FMDQ-appointed settlement bank.
The category is made up of investment banking institutions and securities dealing firms. The Specialist Dealing Membership category is yet to be activated
- 15. Who are Associate Members?
There are three sub-categories of membership under this category as follows:
- Inter-Dealer Brokers - These are SEC-registered brokerage firms that act as intermediaries amongst Dealing Members only.
- Brokers - These are SEC-registered brokerage firms that act as intermediaries between Dealing Members and Clients only
- Clients - This membership sub-category is made up of institutional investors and other corporate organisations such as the
pension managers, fund managers and large business organisations who are end-users of products traded on FMDQ platform.
These members desire access to FMDQ trading systems for best execution and price discovery
- 16. Who are Registration Members?
These are the members sponsoring the issuers that desire listing and/or quotation privileges on the FMDQ platform and are further categorised into two sub-categories as follows:
- Listing Members
- Quotation Members
- 17. What is a Commercial Paper (CP)?
A Commercial Paper is a short-term financial instrument (maximum 270 days tenor in Nigeria), consisting of unsecured promissory notes issued in bearer or electronic form which can be readily traded.
At maturity, the CP issuer pays the amount due to the holder of the CP. A financial institution (e.g. bank, discount house, investment bank) acts as agent for a CP issue, arranging and selling the paper to investors, but does not advance its own funds.
A CP is also a form of disintermediation, i.e. raising funds directly from investors without the financial institutions acting as intermediaries through their loans and deposit business.
A CP is issued as a series of notes, and each note promises to pay the bearer a stated sum of money at the maturity date. Each note shows:
- The name of the issuer
- The amount (value) of the note
- The issue date
- The maturity date
- A certificate of authentication, signed by an authorised signatory of the issuer's issue agent
Each note will also indicate that the note is negotiable, its bearer is entitled to payment, and the payment will be made (on presentation of the note at maturity) by the agent on behalf of the issuer.
- 18. What is a Repurchase Agreements (Repos)?
Repurchase Agreements or Repos are defined as the sale of securities together with an agreement for the seller to buy back the securities at a later date.
They are classified as money-market instruments and are usually used to raise short-term capital.
The party that original buys the securities acts as a lender while the seller acts as a borrower, using the securities involved as collateral for a secured cash loan at a fixed rate of interest.
In some scenarios, the repurchase price will be greater than the original sale price, the difference effectively representing interest and sometimes called the repo rate.
A repo is equivalent to a spot sale combined with a forward contract.
The spot sale results in transfer of money to the borrower in exchange for legal transfer of the security to the lender, while the forward contract ensures repayment of the loan to the lender and return of the collateral of the borrower.
The difference between the forward price and spot price is effectively the interest on the loan. The settlement date of the forward contract is the maturity date of the loan.
For the party selling the security and agreeing to repurchase in the future, it is a Repo while for the party on the other end of the transaction, buying the security and agreeing to sell in the future, it is a Reverse Repo.
The following are types of repos:
- Due bill/Hold in-custody repo - This has grown less common as the repo market has grown. The collateral pledged by the borrower is not actually delivered to the cash lender but is placed in an internal account held in custody by the borrower for the lender throughout the duration of the trade
- Equity repo - Simply a repo in equity securities such as ordinary shares.
- Reverse repo - The same repurchase agreement from the buyer's viewpoint and not the seller's point of view.
- Securities lending - The purpose of this is to temporarily obtain the security for other purposes such as covering short positions.
- Sell/buy back and buy/sell back - This is the spot sale and a forward repurchase of a security. The forward price is set relative to the spot price to yield a market rate of return.
- Tri-party repo - In a tri-party repo, a custodian bank or international clearing organisation, usually called a tri-party agent, acts as an intermediary between the two (2) parties to the repo. The agent is responsible for the administration of the transaction including collateral allocation, marking to market and substitution of collateral.
- Whole loan repo - A form of repo where the transaction is collateralised by a loan or other form of obligation rather than a security.
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