Fourth OTC FX Futures Contract Matures and Settles on FMDQ

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Fourth OTC FX Futures Contract Matures and Settles on FMDQ. Four (4) months into the launch of the Naira-settled OTC FX Futures market, the 4th OTC FX Futures contract, NGUS OCT 26 2016, with notional amount $270.63mm, matured and settled on FMDQ OTC Securities Exchange (”FMDQ” or “the Exchange”) on Wednesday, October 26, 2016. This brings the total value of matured contracts on the Exchange to circa $629.77mm, with about $4.00bn worth of OTC FX Futures contracts traded so far.

The contract, which stopped trading on October 18, 2016, in line with the FMDQ OTC FX Futures Market Operational Standards was valued against Nigerian Foreign Exchange Fixing (“NiFEX”) Spot rate published by the Exchange on the maturity date, and the associated clearing/settlement effected by the Nigeria Inter-Bank Settlement System PLC (NIBSS). Accordingly, and as was the case with the first three (3) maturities, the Central Bank of Nigeria (CBN) repriced its quotes, on the existing 1-month to 11-month contracts and introduced a new 12-month contract, NGUS OCT 25 2017, for $1.00bn at $/₦258.50.

With the OTC FX Futures product in its 4th successful trading month, businesses remain inclined to trading in the Naira-settled OTC FX Futures contracts to hedge their foreign currency exposures and significantly improve business planning. The value-add of playing in the OTC FX Futures market has become even more emphasised, evidenced by the over $4.00bn worth of open OTC FX Futures contracts offered by the CBN, across all the tenors, and traded on FMDQ. The product’s receptiveness by market participants/end-users remains steady as the profile of the contract buyers continues to include Authorised Dealers, Foreign Portfolio Investors and importers, among others.

As CBN continues to drive other initiatives aimed at boosting the Nigerian FX market, the OTC FX Futures product remains a reliable opportunity for corporates and businesses to effectively hedge their FX rate risk.

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