“FMDQ OTC is a Securities and Exchange Commission, licensed trading platform to organise and function as the over-the-counter market. By implication, that means it’s a securities exchange and self-regulating organisation,” Bola Onadele Koko, Managing Director at FMDQ OTC told CNBC Africa.
The launch of the FMDQ as an over-the-counter (OTC) market securities exchange is expected to be revolutionary as it plans on becoming the most effective, efficient and secure technology driven OTC platform in Africa by 2018.
“The interesting part of FMDQ OTC is that it will likely operate under the central bank because of the products that will be traded. When we talk about currency and fixed income, in terms of debt, most of the trading members today are banks and discount houses,” he explained.
The mission of the platform is to empower the Nigerian OTC market while firming up the fixed income securities market.
“We will start with interest derivatives because we have a lot of institutional investors, pension fund administrators, fund managers, asset managers and we think efforts will commence with the interest rate derivatives,” he added.
According to Koko, the FMDQ is set to match international standards and while the Financial Markets Dealers Association has done a lot in bringing transparency to the market, the platform will enhance transparency to the benefit of institutional investors.
“It’s not that we’ve never had transparency at all but we are talking about world-class. Also in terms of integrity, there is integrity in the market but there are things we do to give comfort to investors,” he said.
The FMDQ will be looking at investor protection in the fixed income space, trade guarantee amongst members for comfort and a house that will take complaints from clients.
“In the 2012 statistics, the inter-bank OTC market, which is what we are taking over, recorded 67 trillion if you look at all the products and the money markets. To us the 100 trillion, if we get all the initiatives right, could actually be conservative,” he added.