The Securities and Exchange Commission (SEC) has approved the registration of FMDQ Clear Limited as well as NG Clearing limited as Nigeria’s premier Central Counterparty (CCP).
In separate statements, the two clearing parties said the development has re-defined the landscape for financial transactions and introduced endless possibilities to the scope of permissible products that can be developed and deployed within the ecosystem towards delivering long-lasting prosperity to the Nigerian economy.
Having actively engaged with market participants for several years on the requisite regulations, robust and world-class “Rules on Central Counterparty” were published in December 2019, thereby setting the regulatory environment for the establishment of a CCP.
However, the final piece on FMDQ Clear’s aspiration of evolving into a full-fledged and sustainable CCP was then the legal basis to support its planned activities – netting and bankruptcy remoteness of financial market transactions.
This required legislation, in another revolutionary event for the Nigerian markets, was addressed by the repeal and re-enactment of the Companies and Allied Matters Act, 1990 (CAP C20, LFN 2004) as Companies and Allied Matters Act 2020 (CAMA 2020) into law on August 7, 2020.
Speaking on the purpose of NG Clearing Limited, the Board Chairman, Oscar Onyema, said its major role was to improve the safety of Nigeria’s financial market by delivering best-in-class post-trade services that manage counterparty credit risk and reduce systemic risk.
He said, “to mitigate these credit risks in an efficient and robust manner, we will interpose ourselves as a guarantor to both parties in a transaction, thus ensuring the successful execution of derivatives and other trades from various trade points in Nigeria. We intend to deliver an unparalleled CCP experience to the Nigerian financial market”.
Also expressing his delight at the milestone, the Chief Executive Officer, FMDQ Group, Bola Onadele, said, by the Approval-in-Principle granted FMDQ Clear registration as a CCP, the SEC has again, demonstrated its relentlessness and forward-thinking disposition towards the development of the Nigerian capital markets and the nation’s economy.
“The evolution of FMDQ Clear to a CCP marks a critical and long-awaited milestone in the Nigerian financial markets ecosystem, positioning the markets for revolutionary growth in potentially colossal proportions. FMDQ, as a group, is indeed appropriately placed to de-risk the Nigerian financial markets and thereby, in collaboration with market stakeholders, ensure the realisation of this enormous feat,” he said.