FMDQ OTC Securities Exchange Revises the Methodology for the Daily Market Spot FX Closing Rate

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Monday, November 21, 2016 3:25 PM /FMDQ

In line with its mandate to promote price discovery and transparency in the Nigerian financial markets, FMDQ OTC Securities Exchange (“FMDQ” or “The OTC Exchange”), publishes, amongst others, daily closing prices/rates for the fixed income securities as well as currencies markets, using a pre-defined methodology to ensure credibility of the prices.

To make the closing rate for the foreign exchange (FX) market all-inclusive and fair to all participants, FMDQ has recently revised the methodology of the daily market Spot FX closing rate to reflect the last executed trade on the designated FX Trading System (currently the Thomson Reuters FX Trading System) at 2:00 PM. This revision was published by FMDQ on November 15, 2016, via an FMDQ Market Notice [MN-03(R)], titled “Change in The Methodology for Daily Market Spot Foreign Exchange (FX) Closing Rate”.

The notice further highlighted the need for all market participants to play their parts in ensuring the credibility of the Nigerian FX Market and FMDQ encouraged its Dealing Member (Banks) to confirm all trades and voice report trades done via other medium (including telephones) during business hours (i.e. by 2:00 PM daily) on the designated FX Trading System, in line with the revised methodology for the FX closing rate.

The OTC Exchange had been concerned with the significance of confirmed trades on the designated FX Trading System and had earlier released a Market Notice (MN-03), however, it stated that it has received reasonable assurance that Dealing Member (Banks)/Authorised Dealers will promptly update their inter-Member trades and trades with clients on the designated FX Trading Systems accordingly, necessitating the replacement of the Market Notice with the updated version.

The Dealing Member (Banks) were also encouraged to advise their clients to expedite action on the Central Bank of Nigeria (CBN)’s FX onboarding directive for corporates to further enhance the transparency of the market.

FMDQ is committed to promoting a market structure that will facilitate credibility, transparency and price discovery, and remains positioned to drive global competitiveness by deepening its markets through institutionalising robust market architecture and promoting an efficient, transparent and well-regulated Nigerian financial market, which will attract and retain investors (domestic and foreign).

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