In a recent market notice, the FMDQ Exchange has announced a significant change in the terminology used within the Nigerian Foreign Exchange (FX) market.
The FMDQ informed all stakeholders in the Nigerian Foreign Exchange (FX) market of the revision of the name and all references to the Naira-Settled OTC FX Futures (“NSOFF”) product to Cleared Naira-Settled Non-Deliverable Forwards (Cleared USD/NGN NDFs).
The NSOFF product is a bespoke non-deliverable forward contract with tenors between thirteen (13) and sixty (60) months traded bilaterally on FMDQ Securities Exchange Limited (FMDQ Exchange) and cleared by FMDQ Clear Limited (FMDQ Clear).
Reasons for change
The Exchange noted that the name change for the product aims to reflect the product’s features/characteristics better, as well as bring it in line with international standards, ensuring adequate delineation from the recently launched Naira-Settled Exchange-Traded FX Futures (NSEFF), which are standard FX Futures.
- “Consequently, the Exchange is updating all existing references to Naira-Settled OTC FX Futures across our systems and market documentation to reflect the new name – Cleared Naira-Settled Non-Deliverable Forwards. This change will immediately affect all subsequent reports and communications about the product,” FMDQ Exchange said.
The change will also extend to future reports and communications related to the Nigerian FX market.
This development is set to have a notable impact on how stakeholders in the FX market perceive and interact with this crucial segment of Nigeria’s financial ecosystem.
Market participants, investors, exporters, and financial institutions will need to adapt to this new nomenclature as it becomes the standard terminology for referring to the FX market.
Recent changes
FMDQ recently announced that all references to the Investors’ and Exporters’ (I&E) FX Window will now be replaced with the Nigerian Autonomous Foreign Exchange Market (NAFEM).
The change comes in alignment with the CBN’s press release titled “Operational Changes to the Foreign Exchange Market” issued on June 14, 2023.
The key motivation behind this revision is to abolish segmentation within the FX market and bring about greater consistency in terminology.
Additionally, this change aims to align the nomenclature of the formal FX markets with the provisions of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, which specifically references the Nigerian FX Market as the Autonomous Foreign Exchange Market.
The transition from the I&E FX Window to NAFEM signifies a significant shift in the Nigerian FX landscape.