FMDQ Clear Limited has become Nigeria’s premier central counterparty following the approval-in-principle given to it by the Securities and Exchange Commission.

A central counterparty clearing house is an entity that helps facilitate trading in derivatives and equities markets.

CCPs strive to introduce efficiency and stability into financial markets. It reduces counterparty, operational, settlement, market, legal, and default risk for traders.

FMDQ, in a statement made available to newsmen on Wednesday, noted that as a critical financial market infrastructure, the achievement redefined the landscape for financial transactions.

It said it introduced endless possibilities to the scope of permissible products that could be developed and deployed within the ecosystem towards delivering long-lasting prosperity to the Nigerian economy.

The statement said, “The FMDQ Clear CCP ushers the actualisation of the outstanding building block that will enable the development of thriving repurchase agreements, derivatives, and commodities markets in Nigeria like other developed economies and markets.

“As a critical FMI, FMDQ Clear, as a CCP will interpose itself between two counterparties by becoming the buyer to every seller and seller to every buyer, thereby aggregating and consolidating counterparty risks and introducing the much-desired counterparty agnostic trading feature that will catapult the growth of trading liquidity of financial products in the Nigerian markets to international standards.

“In addition, the CCP, with its robust risk management structures and financial resources, is able to manage the consolidated risks in an operational-, cost- and capital-efficient manner that unlocks value for market participants within its value chain.

It added that SEC moved with foresight and actively engaged market participants for several years on the requisite regulations.

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