FMDQ Securities Exchange Limited (“FMDQ Exchange” or the “Exchange”) continues to play a pivotal role in the development of the derivatives market in Nigeria as it positions for the activation of innovative market offerings. The Exchange recently added a new offering to its universe of innovation with the launch of an automated hedging calculator – “Q-Estimator”, to equip market participants with a tool that aids strategic and informed investment decision-making in the Nigerian financial markets, particularly the derivatives market. The Q-Estimator provides market participants the opportunity to estimate the total cost to be incurred at the point of purchase of derivatives contracts on the Exchange.
Derivatives are primarily risk management instruments used to hedge against financial exposures from unforeseen and unwanted fluctuations in the rates or prices of an underlying asset. In the global financial system, hedging products are market enablers, allowing businesses and investors around the world to invest freely, effectively hedge their risks and invariably contribute to economic growth.
The Q-Estimator, the first of its kind, aids in trading simulation, wherein market participants simulate positions in the market to estimate profit or loss at predetermined maturity date. The introduction of Q-Estimator will benefit all existing and prospective clients of the FMDQ Exchange-Traded Derivatives market, which include, but are not limited to, banks, fund/asset managers, insurance companies, corporate institutions, foreign investors, and individuals.
The launch of the Q-Estimator builds on the robust capacity development programmes that FMDQ Exchange continues to host, in preparing prospective investors for the launch of its Exchange Traded Derivatives products. Since activating the FMDQ Derivatives Market Development Project (the “Project”) in 2018, FMDQ Exchange, through the FMDQ Academy (the “Academy”) franchise, has organised a series of bespoke training sessions, benefitting over 2,600 participants, including financial market regulators, financial institutions, relevant market associations, corporates, media practitioners, etc. These trainings are specially designed to address the diverse interests represented in the derivatives market and provide a holistic understanding of the market ahead of the imminent launch of the FMDQ Exchange-Traded Derivatives (ETD) market. The Exchange will continue to focus its efforts on facilitating the development of a thriving derivatives market, working assiduously to deliver innovative and critical market development initiatives, with the support of its stakeholders.
FMDQ Group is Africa’s first vertically integrated financial market infrastructure (FMI) group, strategically positioned to provide registration, listing, quotation and noting services; integrated trading, clearing & central counterparty, settlement, and risk management for financial market transactions; depository of securities, as well as data and information services, across the debt capital, foreign exchange, derivatives and equity markets, through its wholly owned subsidiaries – FMDQ Exchange, FMDQ Clear Limited, FMDQ Depository Limited and FMDQ Private Markets Limited. As a sustainability-focused FMI group, FMDQ Group, through FMDQ Exchange, operates Africa’s premier Green Exchange – FMDQ Green Exchange – positioned to lead the transition towards a sustainable future.