Nigeria’s Second OTC FX Futures Contract Of USD152.48 Million Matures

Boudewijn Duinstra

As a sign that Nigeria’s Naira-settled OTC Futures market is here to stay, the second OTC FX Futures contract, NGUS AUG 24 2016, with notional amount USD152.48 million at USD/NGN 310, matured and settled on FMDQ.

Clearing operations and settlement for the final amounts, were effected through the Nigeria Inter-Bank Settlement System PLC (NIBSS), in its capacity as the FMDQ-designated Clearing Agent for the margining and settlement of the OTC FX Futures contracts.

The August 24, 2016 matured contract was replaced by the Central Bank of Nigeria (CBN) with a new 12-month contract, NGUS AUG 16 2017, with a notional amount on offer of $1.00bn at $/₦241. In addition, the CBN refreshed its quotes and published new rates on the existing 1-month to 11-month contracts, as shown on the FMDQ website.

Over USD2.40bn worth of the OTC FX Futures contracts offered by the CBN, across all the tenors, with the profile of the contract buyers including Authorised Dealers, Foreign Portfolio Investors and importers, among others, have been traded. The significant increase in turnover clearly shows the receptiveness of the transaction counterparties and end-users to the product.

The Naira-settled OTC FX Futures product has continued to pave the way for corporates to enhance business planning whilst effectively hedging their FX risk, even as the CBN continues to position and empower stakeholders towards a vibrant FX market.

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