As the year 2021 drew to a close in grand style, trading activities across Nigeria’s private over the counter securities exchange intensified further in the month of December to see the total monthly turnover rise 29.92 percent month on month to N20.54 trillion in December 2021 from N15.81 trillion reported in the previous month. This is the first time the total monthly turnover at the FMDQ OTC exchange is crossing N20 trillion in over three months after the number printed at N24.03 trillion in September of the same year.
According to the trading data collated from the FMDQ market on its monthly trading activities with its dealing members such as banks, dealing clients, as well as the Central Bank of Nigeria (CBN), every week and published on its websites, and analysed by Business A.M. Intelligence, there was an average daily turnover on the exchange reaching $2.14 billion or N892.9 billion from 23 total working days.
The continuous engagement of trading activities in the market gives an indication of the growing confidence in the private market from the market participants where activities across various product categories are offered by FMDQ.
On the other hand, the increase reported in December can be attributed to being largely driven by an acceleration of trading activities in the foreign exchange segment which printed at N3.63 trillion from N2.33 trillion and the foreign exchange derivatives category, which rose about 66 percent month on month to N3.21 trillion from N1.94 trillion in the prior month, as well as a surge in the trading of FGN Bonds on the private market. Still, there was trading across various product categories on the exchange.
The categories include the foreign exchange, treasury bills, money market (repurchase agreements, buy-backs and unsecured placements and takings) and bonds, which include FGN bonds and Other bonds, the Eurobonds, foreign exchange and money market derivatives. These figures, however, do not account for the primary market auctions in treasury bills, bonds and foreign exchange on the platform during the review period.
More orderly breakdown of the market turnover as obtained by Business A.M. Intelligence shows that during the preview month, while more activities were witnessed going into the money market and treasury bills categories, the total treasury bills traded on the platform decreased to N1.38 trillion from N2.71 trillion in the prior month as a result of the standoff approach adopted by investors in the market, while taking a cautious stand on other fixed-income securities.
In the same token, while the OMO bills chalked up further to N3.52 trillion from N3.20 trillion reported in November, the CBN Special bills printed at N2.10 trillion at the year end from N379.5 billion in November.
Further revelations from the FMDQ monthly trade data show that repurchase agreements and buy-backs rose to nearly N5 trillion during the month of December (N4.99 trillion), while the unsecured placements and takings during the review period printed at N68.09 billion. On the other hand, there were no trades in the commercial papers and money market derivatives categories of the market during the month.
In another place in the bond segment of Nigeria’s over the counter securities exchange, a total of N1.47 trillion was traded in December 2021 from N989.2 billion traded on the FGN Bonds in the preceding month as portfolio managers, as well as fixed-income investors, began the hang around for better yields on their investments, resulting in the decreased activity level in the treasury bills space. Likewise, there was a significant increase recorded in the Eurobond segment of the market to N167.5 billion from 147.89 billion worth of trades in November of 2021 in the market.