Nigeria launches digital platform for OTC bond, forex, money trade
Friday, 22 November 2013 07:04
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Reuters: Nigeria launched a digital platform recently for over the counter trading of bonds, money market instruments and foreign exchange in a move the central bank said would deepen capital markets and aid infrastructure financing in Africa’s second biggest economy.
The Financial Markets Dealers Quotations (FMDQ) aims to replace the current telephone dealing system, as well as helping the central bank better regulate Nigeria’s growing debt and money markets and provide data services.
No one will be required to use it, but proponents expect a quick uptake. Although T-bills, interbank lending and even forex will be tradable on it, its main function will be to boost the longer term bond market, the central bank says.
Data from the Debt Management Office (DMO) shows Nigeria had about 7.37 trillion Nigerian naira ($ 46.5 billion) in bonds traded as of June this year, including federal bonds and treasury bills, state government and corporate bonds.
That is dwarfed by equities, which have a market capitalisation on the stock exchange of 12 trillion naira.
“It’s one of the boxes I wanted to tick before I complete my term,” Central Bank Governor Lamido Sanusi, who steps down next year, told reporters after the launch in Lagos. “It provides an enabling environment for improved price discovery for the deepening of financial markets, and we all know the country needs long term funding for infrastructure.”
Nigeria is one of Africa’s most dynamic economies, growing at around 7% a year, but it faces huge infrastructure bottlenecks such as a lack of power that need funding to fix.
