FMDQ to start listing of short-term bonds

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LAGOS, OCTOBER 20, 2016 – FMDQ OTC Securities Exchange has introduced short-term bonds to the Nigerian fixed income market.

The Exchange, on Wednesday, said this was achieved through its various engagements and the subsequent approval of the action by the Securities and Exchange Commission.

As an innovation-driven Exchange focused on powering growth, through product and market development, the FMDQ confirmed that it carried out extensive consultations with stakeholders in the Nigerian financial market space before introducing the STBs.

The STBs are short-term debt instruments issued by corporate entities for tenors of between one year and three years.

In addition to bridging the funding gap between short- and medium- to long-term debt instruments, the STBs are designed to serve the liquidity needs of the medium to large creditworthy corporates and commercial entities by providing an alternative/competitive source of financing to bank loans.

“The STBs are beneficial to the debt capital market as they will serve to boost the investment product bouquet for the buy-side (which comprises, amongst others, the Pension Fund Administrators), offshore investors and other market participants,” the statement added.

Furthermore, SEC also approved the FMDQ short-term bonds registration process and listing rules, which were developed in furtherance of the FMDQ’s commitment to provide effective market regulation and governance for the markets under its purview.

The STB rules served as a guide to issuers, the STB sponsors and the investing public, among others, the statement said.

It also stated, “The rules outline the governance structure for the STB issuances as well as the procedure for the registration of prospective STB issuances.

“As a consequence of SEC’s approval of the STB rules, the FMDQ will serve as the Exchange through which the primary due diligence for all the STB issuances, consequently ensuring an expedited time to market, shall be conducted and also provide its efficient platform for the registration and listing of all STBs.”

With the recently launched naira-settled OTC Foreign Exchange Futures product in its 4th successful trading month and about $4bn worth of contracts traded on the FMDQ, the Exchange said it had continued to articulate ways to improve the performance of the market.

“The importance of a fully functional and efficient DCM in powering the growth and development of Nigeria cannot be overemphasised. Even in the light of the present economic climate, the FMDQ remains keen and unrelenting in its efforts to actively work with relevant stakeholders to deliver on its agenda of making the Nigerian financial market globally competitive, operationally excellent, liquid and diverse,” the statement noted.

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