STL TRUSTEES CAPITAL MARKET & MONEY MARKET NEWS RECAP

While you were away!

SEPTEMBER FGN BOND AUCTION OVERSUBSCRIBED BY N158 BILLION

The Federal Government of Nigeria Bond Auction for September 2018, conducted by the Debt Management Office (DMO) on Wednesday 26^th September 2018, was oversubscribed.

A statement from the DMO said it received subscriptions from bidders for three Bonds offered: 5-year, 7-year and 10-year in excess of N158 billion, against the N90 billion offered.

The DMO noted that the “demand at the Auction was concentrated on the 10-year bond which was 313 per cent subscribed.”

Demand at the Auction was concentrated on the 10- year bond which was 313% subscribed and at the end of the bidding exercise, “allotments were made to successful bidders at 15.00% for the 5-year, 15.15 per cent for the 7-year and 15.2459 per cent for the 10-year Bond, which are consistent with the rates in the secondary market for the Bonds offered at the Auction.”

The statement added that as in the past, “a total of N96.74 billion was allotted to bidders at the Auction and the proceeds will provide additional financing for the implementation of the 2018 Appropriation Act.”

 CBN RETAINS MPR AT 14%

The Central Bank of Nigeria (CBN) concluded its Monetary Policy Meeting on Tuesday 25^th September 2018 leaving Monetary Policy Rates at 14% and other parameters unchanged.

MPR was thus left at 14%, Cash Reserve Ratio CRR at 22.5% and Liquidity Ratio at 30%.  The asymmetric corridor for the MPR was also left at +200/-500 basis points.

The CBN Governor gave reasons for the retention, by stating that retaining the rates would sustain gradual improvement in output (GDP)growth.  He explained further that there was also a need to maintain the current policy (interest rate and other parameters) stance in order to get a clearer understanding of the quantum and timing of the planned monetary injections before deciding on possible adjustments

Emefiele, however, stated that three of the members pushed for an increase in the Cash Reserve Ratio (CRR) by 150 basis points, an indication that left to them they would tighten (increase interest rates). Three members pushed for an increase of the MPR by 25 basis points. This is an indication that a rate hike may be drawing nigh.

The Monetary Policy Rate (MPR) is the rate at which the CBN lends to commercial banks. This, in turn, provides a benchmark at which the banks lend to the public.  The Cash Reserve Ratio (CRR) is the proportion of a bank’s deposits it has to hold as deposits either in cash or with the CBN.

Liquidity ratio is the ratio of a bank’s liquid assets to its liabilities. In other words, a bank’s cash balance plus assets that it can easily convert to cash to the total liabilities owed by the bank, which is typically deposits.

SEC SET TO ISSUE REGULATION FOR FINTECH PRODUCTS

The Securities and Exchange Commission (SEC) has announced plans to come out with regulations that will guide technology products in the capital market

Acting Director-General of SEC, Mary Uduk, revealed this at the presentation of a lecture in Abuja.

According to her, the intention to issue new regulations for Fintech was aimed at transitioning towards a technology-driven capital market as well as protect investors. She further noted that SEC was interested in the investments that Nigerians were making, especially with the advent of digitalisation.

In her words:

“If we will regulate this market and understand what is happening, we need our staff to understand the rudiments of fintech. Very soon, the whole world will move to technology for regulation. Other jurisdictions have already gone far into it with some of them already amending their rules in that direction.

“The International Organisation of Securities Commissions is on it and there is a lot on it already all over the world, and we cannot be left behind. We are very much interested in some of the most active areas of fintech innovation like blockchain technology, crypto currencies and how they affect investors.”

At the event, she announced Mr. Ade Bajomo as the chairman, Capital Market Committee on Fintech Roadmap for Capital Markets in Nigeria.

Recall that the Capital Market Committee (CMC) at its last meeting in Lagos, agreed to set up a committee to draw a fintech adoption road map for the capital market.

At the meeting, she reiterated the need for the capital market to take advantage of the fintech offerings going forward.

According to her, the capital market needs to create an enabling environment that is attractive enough for fintechs to innovate and engage actively with the new trend in technology.

The Securities and Exchange Commission (SEC) is the apex regulatory institution of the Nigerian capital market supervised by the Federal Ministry of Finance.

DOLLAR EXCHANGE RATE REPORT 17TH^TH SEPTEMBER TO 28^TH SEPTEMBER 2018

This report is a compilation of the dollar exchange rate at the official and parallel market from the 17^th of September to the 28^th of September 2018.  The quoted parallel market prices are to serve as a guide to readers, as they represent the average price obtained daily from different black-market dealers in the Country.