Yemisi Izuora
The Managing Director/Chief Executive Officer of FMDQ OTC, Mr. Bola Onadele has assured stakeholders in the over-the-counter (OTC) fixed income securities market of better deal.
Bola who spoke at the 2015 annual workshop of the Capital Market Correspondents Association of Nigeria (CAMCAN) in Lagos noted that after turning around the market within two years, the next step is to bring more innovations that will benefit all stakeholders and make the platform more attractive to issuers and investors.
Speaking through the Head, Business Development, FMDQ OTC, Ms. Tumi Sekoni, he said FMDQ OTC has not only deepened the fixed income debt securities market but has also made it very liquid for investors to enter and exit.
Onadele disclosed that while the platform has been quoting federal government and corporate bonds of public companies among others, there are plans to quote bonds of private companies as part of its commitment to support efforts aimed at galvanising the development of the Nigerian economy.
Private companies’ bonds that, by law, can only be issued through private placements. Some of the Nigerian, significantly important, private companies in oil & gas, power, telecommunications, manufacturing and infrastructure require long-term funding.
Currently, their long-term funds are structured as loans and funded by banks thereby putting their balance sheets under significant risk management, liquidity and capital adequacy pressures.
“FMDQ will establish the requisite market governance over these private companies’ bonds as part of its investor protection standards in making the Nigerian debt capital market globally competitive to attract pension funds and foreign capital,” he said.
He added that FMDQ is establishing the building blocks to redefine access to long-term debt capital for private companies and ventures in Nigeria. “
FMDQ is establishing the building blocks to redefine access to long-term debt capital for private companies and ventures in Nigeria. FMDQ is promoting the market structure that will facilitate the injection of credibility and transparency to the quotation of private companies’ bonds that, by law, can only be issued through private placements.
The platform is promoting the market structure that will facilitate the injection of credibility and transparency to the quotation of private companies’ bonds that, by law, can only be issued through private placements,” Onadele said.
According to the securities exchange, the Nigerian market for bonds of private companies is undeveloped and currently not under any market governance, implying the absence of an oversight and proper governance on the activities in that space.
“Consequently, FMDQ, in its capacity as an over-the-counter (OTC) securities exchange as well as a self-regulatory organisation, is fulfilling its responsibility and has taken up the challenge of tackling the attendant inadequacies evident in any unregulated market by developing Quotation Rules for bonds issued by private companies with the aim of providing adequate governance over the registration, quotation and trading of bonds of private companies on FMDQ, thereby potentially serving as the benchmark for how this market is regulated in Nigeria as a whole,” he said.
FMDQ OTC was last month ratified as a full member exchange of the African Securities Exchanges Association (ASEA).
A full member status entitles FMDQ to vote during the Association’s annual general meeting (AGM), fully participate in ASEA events, be featured in publications, as well as the privilege to nominate a representative for election to the ASEA Executive Committee.
“This admission is a positive step towards making the markets globally competitive and provides, among others, a platform for unlocking the potentials in the Nigerian capital markets through mutual networking and communication with various member exchanges in Africa.
Membership of the ASEA is an important reference for many international investors and the status reflects FMDQ’s commitment to implementing the highest standards in line with international best practices,” the company had said.