FMDQ Securities Exchange Limited, a platform that oversees FX trading in Nigeria, says it has made some changes to the computation methodologies of its foreign exchange (FX) rate-fixing products.
According to a market notice by FMDQ Exchange, the new methodology took effect from July 5, 2023.
FMDQ Exchange said the notice was in response to the global shift from a contribution-based model to a transaction-based model.
The decision was also in line with the recent unification of all segments of the forex exchange (FX) market by the Central Bank of Nigeria (CBN).
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According to the market notice, the Nigerian autonomous foreign exchange rate fixing (NAFEX) and the investors and exporters (I&E) FX window spot rates will now be calculated using actual FX market transaction data, rather than indicative quotes from market participants.
“Based on the foregoing and upon completion of relevant stakeholder engagements, FMDQ Securities Exchange Limited (FMDQ Exchange or the exchange), hereby notifies market participants of revisions to the computation methodologies of the Nigerian autonomous foreign exchange rate fixing (NAFEX) or the benchmark), and I&E FX window spot rates to effect a transition from the current contributions-based model (which involves the use of indicative quotes from market participants) to a transactions-based model (which will apply actual FX market transaction data), effective Wednesday July 5, 2023,” the notice reads.
Consequently, FMDQ encouraged dealing members (banks) to continuously execute and, accurately and promptly report their FX market transactions during trading hours on the FMDQ-designated trading system to ensure representativeness and integrity of the benchmark.
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