Fixed income, currency markets turnover hits N12.26trn

Turnover of transactions carried out in Nigeria’s Fixed Income and Currency (FIC) markets for the month of December 2016 amounted to N12.26trillion, according to the FMDQ OTC Securities Exchange. 

The record turnover of transactions represents an increase of 29.37 percent (N2.78trillion) over the value recorded in November 2016 and a 65.08percent (N4.83trillion) increase year-on-year (YoY), FMDQ OTC arket summary shows.

Activities in the Treasury Bills (T.Bills) market for the reporting month of December accounted for 45.20 percent (November – 48.65percent), while Secured Money Market [Repurchase Agreements (Repos)/Buy-Backs] accounted for 20.75 percent (November – 25.19percent).

In the same period, Foreign Exchange (FX) market accounted for 21.39percent (November – 19.45percent) of the total turnover, while FGN bonds and Unsecured Placements/Takings accounted for 10.62percent (November – 4.30percent), and 2.01 percent (November – 2.35percent) of total turnover respectively.

Access Bank Plc, United Bank for Africa Plc and Stanbic IBTC Bank Plc topped the league table, ranking first, second and third respectively, in the value traded for the overall over-the-counter (OTC) market. The three (3) banks have a combined market share representing 27percent of the overall trades executed (buy and sell sides) in the markets. Rand Merchant Bank Nigeria Limited, Unity Bank Plc and Keystone Bank Limited continue to remain at the bottom of the league table, occupying positions of twenty-first, twenty-second and twenty-third positions respectively.

United Bank for Africa Plc, Ecobank Nigeria Limited and Access Bank Plc topped trading amongst Dealing Member (Banks) for the overall OTC market.

Leaders in the Dealing Member (Banks) versus Client trading category were Access Bank Plc, Stanbic IBTC Bank Plc and Standard Chartered Bank Nigeria Limited. The leaders in the Dealing Member (Banks) versus CBN trading category were Diamond Bank Plc, Zenith Bank Plc and Access Bank Plc.

FX Market

Transactions in the FX market settled at $8.40billion in December, an increase of 42.13percent ($2.49billion) when compared with the value recorded in November ($5.91billion). The sixth Naira-settled OTC FX Futures contract, NGUS DEC 21 2016, with total open contracts worth $477.45million, matured and settled within the review month.

The CBN revised the rates offered on all outstanding OTC FX Futures contracts, whilst a new 12-month contract – NGUS DEC 27 2017 – was introduced at $/N274.

Member-Member trades stood at $0.74billion in the month of December, an increase of 42.26percent ($0.22billion) compared with trades recorded in November and a decrease of 34.79percent ($0.40bn) YoY, while Member-Client trades increased by 35.75percent ($1.63billion) from the previous month and decreased by 36.32 percent ($3.54bn) YoY.

Member-CBN trades stood at $1.45billion in December (November – $0.82billion), representing an increase of 59.07percent ($0.64billion) month-on-month (MoM).

In the month under review, the Naira remained relatively flat to close at $/N305 in the inter-bank market and depreciated by 1.25percent to close at $/N486 in the parallel market. In the Spot FX market, the top three (3) Dealing Member (Banks)  – Access Bank Plc, United Bank for Africa Plc and Diamond Bank Plc a combined Spot FX market share representing circa 37percent of the overall trades executed in the market.

The Dealing Member (Banks) versus Client trades comprised the bulk of this market share, accounting for 68 percent of the trades executed. In the overall FX Derivatives market, the top three (3) positions were occupied by Standard Chartered Bank Nigeria Limited, (moving up from second place), Stanbic IBTC Bank Plc, (previously in first place) and Access Bank Plc respectively; with the Dealing Member (Banks) versus Client trades accounting for 56percent of these trades. Standard Chartered Bank Nigeria Limited, Stanbic IBTC Bank Plc and Diamond Bank Plc came in respectively at first, second and third positions in the FX Swaps market; while in the FX Forwards market, Access Bank Plc, Stanbic IBTC Bank Plc and First Bank of Nigeria Limited ranked first, second and third positions respectively.

In the OTC FX Futures market, Zenith Bank Plc, Access Bank Plc and Stanbic IBTC Bank Plc ranked first, second and third places respectively.

Fixed Income Market (T.Bills and FGN Bonds)

Turnover in the Fixed Income market in the month under review settled at N6.85trillion, 36.26percent (N1.82trillion) increase above the preceding month’s value, with transactions in the T.Bills market accounting for 80.94 percent of the Fixed Income market turnover.

Outstanding T.Bills at the end of the month amounted to N7.53trillion (November – N7.27trillion) whilst outstanding FGN bonds increased by 1.04percent (N0.69trillion) from November to close at N6.66trn in the period under review.

Trading intensity in the Fixed Income market settled at 0.65 and 0.16 for T.Bills and FGN bonds respectively, with maturities between 1 – 3 months being the most actively traded (N1.70billion) in the period under review.

The short- and medium-ends of the FGN bond yield curve gained by averages of 0.93 percent and 0.08percent respectively, whilst the long end yield of the curwwve declined by an average of 0.13percent.

Spread between the 10-year and 3-month benchmarks closed at -2.30percent points at the end of the month under review, compared with -1.69percent points recorded in the preceding month.

The leaders in the T.Bills market were Stanbic IBTC Bank Plc, United Bank for Africa Plc and Access Bank Plc, occupying first, second and third positions respectively, with their combined market share at 26percent of the overall trades executed.

The market summary also shows that 92percent of the trades carried out in this market during the period under review were between Dealing Member (Banks). The leaders in the Bonds market, occupying first, second and third positions respectively, were Ecobank Nigeria Limited (moving up from third place), Access Bank Plc (previously occupying first place) and Stanbic IBTC Bank Plc (previously in second place).

The three (3) banks maintained their positions as the leaders, for the seventh month running, in the value traded in this market. Their combined market share of the total value traded was recorded at 43percent.

Trades amongst Dealing Member (Banks) accounted for 85percent of the total market share, with Dealing Member (Banks) versus Client and Dealing Member (Banks) versus Central Bank of Nigeria (CBN) trades accounting for the remainder. 

Money Market (Repos/Buy-Backs and Unsecured Placements/Takings)

Activities in the Secured Money Market (Repos/Buy-Backs) settled at N2.54trillion, 6.60percent (N0.16trillion) below the value recorded in November. On a YoY basis, Repos/Buy-Backs turnover recorded an increase of 36.24percent (N0.68trillion).

Unsecured Placements/Takings increased by 10.71percent (N0.02trillion) to close the month at a turnover of N0.24trillion; a decline of 30.02percent (N0.11trillion) YoY.

In the Secured Money Market (Repos/Buy-Backs), ranking first, second and third places respectively as leaders in the value traded in this market, were United Bank for Africa Plc, First Bank of Nigeria Limited and First City Monument Bank Limited.

Inter-member trades [that is trades between Dealing Member (Banks)] dominated this market with all trades executed by the top three (3) Dealing Member (Banks) accounting for 35percent of the market share.

In the trading of Unsecured Placements/ Takings, the top three (3) leaders, with a combined market share representing circa 62percent of the overall trades executed in this market, were United Bank for Africa Plc, Access Bank Plc and Ecobank Nigeria Limited. Trades between Dealing Member (Banks) accounted for about 95percent of this market share.   

Market Surveillance

The number of executed trades captured on the E-Bond trading platform for the month of December amounted to 20,601 as against 16,571 recorded in the month of November. Executed trades on T.Bills and FGN bonds recorded an increase of 23.01percent and 33.34percent respectively at the end of December.

Iheanyi Nwachukwu