FMDQ CEO pushes hedging products as next stage of FX development

The Managing Director and Chief Executive Officer of FMDQ Group, Zeal Akaraiwe, has urged Nigerian regulators and market infrastructure institutions to develop deeper hedging markets while foreign exchange conditions remain stable, rather than waiting for another market shock.

Speaking at an investor meeting in Singapore, Akaraiwe said, “Nobody builds during a storm. Nobody buys an umbrella when it’s raining. You buy it before it’s raining,” while describing the Central Bank of Nigeria (CBN) as aggressive in its efforts to support market development.

The meeting formed part of a dialogue convened by the CBN in partnership with J.P. Morgan, Nigerian Exchange Group (NGX) and FMDQ Group, bringing together investors, financial institutions and Nigerians living and working across Asia.

FMDQ calls for deeper Hedging Markets:

Akaraiwe credited the CBN with improving credibility and predictability in Nigeria’s financial markets over the past few years. However, he argued that greater market stability should provide the foundation for innovation, particularly in products that allow investors and businesses to manage currency and other financial risks.

He said foreign investors also need confidence that they can exit the market under predictable conditions.

• “The Central Bank over the last couple of years has built credibility, has brought in a certain degree of predictability into the market.”
• “But at this point, it’s important for a financial market infrastructure institution to bring in the credibility into policy formation, so that the markets can then innovate for products.”
• “A lot of times we make the mistake of confusing stability with being static. Stability does not mean static.”
• “Nigeria is large, but what we need to aspire to at the next phase is depth. We do a very huge but limited amount of bonds and FX, but what next? How are we going to start introducing forwards, cross-currency swaps, and then at some point even options?”

Akaraiwe also called for technology-driven exchange-control monitoring and stronger professional competency, identifying market participants, infrastructure, credibility, predictability and product development as priorities over the next five to ten years.

FMDQ expands Derivatives Market development:

Akaraiwe assumed office as FMDQ Group CEO in June 2026, succeeding Bola Onadele Koko, the pioneer Group Managing Director and CEO, who retired after 12 years. Nairametrics previously reported that his appointment signalled a continued focus on market innovation, risk-management products and capital-market development.

His latest comments build on derivatives initiatives introduced under his predecessor, while pointing to the need for greater market depth and wider product adoption.

FMDQ introduced the USD/NGN Non-Deliverable Forwards market in 2016, providing an earlier foundation for FX hedging activity.

• In 2023, FMDQ launched Exchange Traded Derivatives, including bond futures and naira-settled FX futures.
• Akaraiwe identified forwards, cross-currency swaps and eventually options as areas for further market development.
• The Singapore engagement forms part of CBN Governor Olayemi Cardoso’s wider Asia outreach, including meetings with the Monetary Authority of Singapore and an MoU with the Global Finance & Technology Network.

The broader programme also includes planned engagements in Beijing, as the CBN and its market partners continue discussions with international investors and financial institutions.

FX Spot trading dominates turnover:

The latest FMDQ market data illustrates the relatively limited share of derivatives in Nigeria’s foreign exchange trading activity. For the week ended October 2, 2026, Spot transactions accounted for 96.19% of total FX turnover, while derivatives represented only 3.81%.

This concentration provides the immediate market context for Akaraiwe’s argument that Nigeria needs to deepen hedging activity while exchange-rate conditions remain relatively stable.

• FX spot transactions totalled $1.632 billion during the week, representing 96.19% of overall turnover.
• FX derivatives, comprising forwards, accounted for $64.73 million, equivalent to 3.81% of total activity.
• Derivatives turnover increased 65.09% during the week, even as total FX turnover declined 35.41% to $1.697 billion.
• The figures came as Nigeria’s gross external reserves remained near an 18-year high and the naira traded around N1,330/$.

The relatively small derivatives share shows that spot transactions continue to dominate FX market activity despite the availability of existing hedging instruments. Akaraiwe’s central argument is that stronger products, infrastructure and predictable exit conditions should be developed during periods of stability so investors and businesses are better positioned when market conditions change.