Africa’s first vertically integrated financial market infrastructure (FMI) group, FMDQ Group operates through its subsidiaries—FMDQ Securities Exchange Limited, FMDQ Clear Limited, FMDQ Depository Limited, FMDQ Private Markets Limited, and iQx Consult Limited—providing services across securities exchange, clearing, depository, private markets, and consultancy functions. In 2024, amid economic conditions including 34.80% inflation, Naira volatility, and a 27.75% Monetary Policy Rate, FMDQ reported a 49.93% revenue increase to ₦51.41 billion and an 86% rise in market turnover to ₦461.34 trillion.
This analysis of FMDQ 2024 annual report compiled by Deals and Advisory Report, examines FMDQ’s market activities across its Exchange, Clearing, Depository, and Private Markets franchises. It covers securities admissions, market turnover, clearing services, depository lodgements, and private markets notings. The report also addresses challenges, such as declines in securities volumes and rising operational costs, and notes FMDQ’s plans for equity markets and unsponsored depositary receipts in 2025.
1. Key Market Metrics in 2024
a. Exchange Business: Securities Admissions and Market Turnover
-Securities Admissions
Total Admissions: 180 securities valued at ₦1.68 trillion in 2024, a 34.31% decrease in volume from 274 securities in 2023 (valued at ₦2.49 trillion).
-Breakdown:
5 Listed Bonds
172 Quoted Commercial Papers
1 Listed Sukuk
2 Listed Funds
29 Commercial Paper Programmes valued at ₦1.04 trillion
-Market Turnover
Total Turnover: Increased by 86% to ₦461.34 trillion in 2024 from ₦248.66 trillion in 2023.
Key Contributors: Foreign Exchange (FX) Segment: 45% of total turnover, with Spot FX growing 283% year-on-year (YoY).
Bills Segment: Nigerian Treasury Bills, CBN OMO Bills, and CBN Special Bills contributed 22%.
eMoney Market Instruments: Accounted for 27%.
Bonds: Contributed 6%, down from 12% in 2023, indicating a shift toward FX and short-term instruments.
Dominance: FX, Money Market, and Bills accounted for 94% of total turnover.
Membership Growth
Total Members: Grew by 3.57% to 348 in 2024 from 336 in 2023, driven by a 7.76% increase in the “Registration Member” category.
Impact: Enhanced market participation supports higher transaction volumes.
-e-Markets Portal
User Growth: Increased by 19.59% to 6,985 users in 2024 from 5,841 in 2023.
- Future Plans: Integration of FMDQ Q-Pay (payment gateway) in Q2 2025 to streamline subscription processing and enhance transaction efficiency.
b. Clearing Franchise: Central Counterparty (CCP) Services
- Services Provided: FMDQ Clear Limited offered CCP services for Exchange-Traded Derivatives (ETD), including FGN Bond Futures and FX Futures (launched in 2023).
- Expansion: In 2024, operational readiness was enhanced for CCP services in Fixed Income Spot and Repo markets.
- Revenue Contribution: Post-Trade Services (primarily clearing) contributed ₦28.86 billion (56% of total Group revenue of ₦51.41 billion).
- Significance: Clearing services are critical for de-risking transactions and enhancing market integrity.
c. Depository Franchise: Securities Lodgement
- Total Lodgements: 150 securities valued at ₦1.28 trillion in 2024, a 2.40% YoY increase from ₦1.25 trillion in 2023.
- Breakdown:
9 Private Companies’ Bonds
137 Commercial Papers
3 Corporate Bonds
1 Sovereign Bond
- Participant Growth: Depository Participants increased by 14% to 150 in 2024 from 132 in 2023.
- System Enhancement: Deployment of the Q-ex Depository System (47 subscribers) improved operational efficiency and post-trade processing.
d. Private Markets Franchise: Securities Noting
- Total Notings: 7 securities in 2024 (6 Private Companies’ Bonds, 1 Private Companies’ Note), a 30% decline in volume from 10 securities in 2023.
- Value Growth: Total value increased by 44.69% to ₦1.13 trillion from ₦780.96 billion in 2023.
- Membership Growth: Increased by 15% to 46 members from 40 in 2023.
- Observation: Focus on high-value transactions enhanced the franchise’s contribution to market liquidity.
2. Financial Contribution of Market Activities
a. Group Revenue
- Total Revenue:
₦51.41 billion in 2024, a 49.93% increase from ₦34.29 billion in 2023.
- Key Contributors:
Post-Trade Services (FMDQ Clear): ₦28.86 billion (56%)
Transaction Fees: ₦5.72 billion (11%)
Other Revenue (e.g., Interest Income): ₦16.82 billion (33%)
b. Exchange Revenue
- Total Revenue: ₦9.54 billion in 2024, up 31% from ₦7.31 billion in 2023.
- Breakdown:
Net Transaction Fees: ₦5.72 billion (60%, up 39% from ₦4.13 billion)
Non-Transaction Fees: 28%
Other Income (e.g., Interest, Penalties, Fines): ₦1.13 billion (12%, up 109% from ₦0.54 billion)
Profitability
- Group Profit Before Tax: ₦23.23 billion, up 65.54% from ₦14.03 billion in 2023.
- Company Profit Before Tax: ₦9.22 billion, up 109.69% from ₦4.40 billion in 2023.
3. Strategic Significance of Deals and Transactions
a. Product Innovation
- Expanded ETD market with long-dated FX Futures (21 tenors from 12
- Deployment of the PenDealer system’s price-discovery module improved transparency in the pension sector.
b. Market Liquidity and Transparency
- 86% increase in market turnover (₦461.34 trillion) driven by FX and money market instruments.
- e-Markets Portal user growth and planned FMDQ Q-Pay integration enhance access to market data and transaction efficiency.
4. Challenges and Considerations
a. Decline in Securities Volume
- Exchange admissions dropped 34.31% (180 vs. 274 in 2023).
- Private Markets notings declined 30% in volume, possibly due to high interest rates and tighter capital access.
b. Economic Volatility
- Inflation (34.80% in December 2024) and Naira volatility impacted market sentiment, reducing bond turnover (6% vs. 12% in 2023).
c. Operational Costs
- Group expenses rose 37.67% to ₦30.88 billion due to regulatory, personnel, and IT costs, potentially pressuring profitability.
5. Key Observations
a. Macro Context
- Environment: High inflation (34.80%), Naira volatility, and MPR at 27.75% posed challenges. FX unification reforms drove resilience.
- Financial Performance: Group revenue up 49.93% to ₦51.41 billion; Profit Before Tax up 65.54% to ₦23.23 billion.
b. Deals Volume and Value
- Exchange: 180 admissions (₦1.68 trillion, down from ₦2.49 trillion).
- Depository: 150 lodgements (₦1.28 trillion, up 2.40% YoY).
- Private Markets: 7 notings (₦1.13 trillion, up 44.69% in value).
c. Transactions and Turnover
- Secondary market turnover surged 86% to ₦461.34 trillion, led by FX (45%, Spot FX up 283% YoY).
- Post-Trade Services contributed 56% of Group revenue (₦28.86 billion).
d. Sector Trends
- Deals spanned infrastructure, manufacturing, finance, and real estate.
- Sukuk and green initiatives align with sustainability goals.
- FX derivatives expanded to 21 tenors, enhancing hedging.
e. Risks and Opportunities
- Volatility boosted FX turnover but reduced admissions.
- Report aggregates securities without individual names, focusing on totals.
6. More on Market Activities
a. Sectoral Breakdown and Implications
- Foreign Exchange (FX) Segment:
The 283% year-on-year (YoY) growth in Spot FX transactions, contributing 45% to the total market turnover of ₦461.34 trillion, highlights the FX segment’s dominance. This surge is likely tied to Nigeria’s 2023 exchange rate unification, which increased FX market activity and volatility, driving demand for FMDQ’s trading and reporting platforms.
The expansion of FX Futures contracts to 21 tenors (from 12) in 2024, including a thirteenth-month contract and eight consecutive quarterly contracts, reflects FMDQ’s strategic focs on derivatives to hedge currency risks. This is particularly significant given Nigeria’s Naira volatility, with gross external reserves at $40.88 billion providing some stability.
- Fixed Income and Money Market:
The Bills segment (Nigerian Treasury Bills, CBN OMO Bills, and Special Bills) contributed 22% to market turnover, while Money Market instruments accounted for 27%. These segments reflect strong demand for short-term, low-risk instruments amid high interest rates (CBN’s Monetary Policy Rate at 27.75%).
Bonds, however, saw a decline in contribution to 6% of turnover (from 12% in 2023), possibly due to elevated borrowing costs and investor preference for shorter-tenor instruments.
- Implication:
The shift toward Bills and Money Market instruments indicates a cautious investor sentiment in a high-interest-rate environment, with FMDQ’s platforms facilitating liquidity and price discovery for these instruments.
- Commercial Papers and Sukuk:
The admission of 172 Commercial Papers (out of 180 total securities) valued at a significant portion of the ₦1.68 trillion admitted on the Exchange highlights the dominance of short-term corporate financing. The registration of 29 Commercial Paper Programmes worth ₦1.04 trillion further supports corporate access to capital.
- Private Markets:
The 44.69% increase in the value of securities noted (₦1.13 trillion) despite a 30% decline in volume (7 securities vs. 10 in 2023) suggests a focus on high-value private issuances.
Economic Snapshot 2024
- Naira Volatility: Inflation at 34.80%, MPR at 27.75%
- FX Reforms: Unification boosted market activity
- Group Revenue: ₦51.41B (+49.93% YoY)
- Profit Before Tax: ₦23.23B (+65.54% YoY)
Market Turnover Breakdown
- Total Turnover: ₦461.34T (↑86% YoY)
- FX Market: 45% share, Spot FX up 283% YoY
Securities Admissions (Exchange)
- 180 Securities Admitted (↓34.31% from 274)
- Value: ₦1.68T (↓ from ₦2.49T)
Depository Lodgements
- 150 Securities Lodged (↑2.40% to ₦1.28T)
Private Markets Notings
- 7 Securities Noted (↓30% from 10), Value: ₦1.13T (↑44.69%)
Analysis by Deals and Advisory Report | Source: FMDQ Group 2024 Annual Report
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