#1-FMDQ Presentation to Capital Markets Committee (CMC) Bola Onadele. Koko Group Managing Director/Chief Executive Officer FMDQ Group April 15, 2021 ☐ Exchange ■ Central Counterparty Depository ■ Private Markets#2Outline FMDQ Group -FMDQ 2. FMDQ Securities Exchange Limited 6. FMDQ Clear Limited 11. FMDQ Depository Limited 14. 1#3FMDQ Group FMDQ Securities Exchange Limited FMDQ Clear Limited FMDQ Depository Limited 2 -FMDQ 2.#4Debt Capital Market Development Project Debt Capital Market Development Project 2025 Housing Finance SubCo Development of the National Housing Strategy Advocacy for the withdrawal of 25% from RSA as equity contribution for mortgage loans Advocacy on the passage of Model Mortgage Foreclosure Law Advocacy for the adoption of Uniform Underwriting Standards by commercial banks Participation in the Financial Strategy System (FSS) 2020 Housing Finance Committee Execution of Housing Roundtables in collaboration with relevant stakeholders -FMDQ Vision To become a world class, properly functioning debt capital market by 2025 Strategic Objectives Product/Investor Diversification Infrastructure Finance SubCo Supported the birth of the newly-established InfraCo which backs the development of Nigeria's infrastructure Spearheading the tradability framework of the Road Infrastructure Tax Credit Scheme ■ Collaboration with the Infrastructure Concession Regulatory Commission to support advocacy efforts on the National PPP Policy, capacity building on project bonds, etc. Sustainable Finance SubCo Implementation of the Nigerian Green Bond Market Development Programme Activation of the Financial Centre for Sustainability, Lagos Collaboration with the Federal Ministry of Environment PACET Agenda - Increased Market Size Operational Efficiency Enabling Environment Note: SubCo - Sub-Committee, RSA - Retirement Savings Account, PPP- Public-Private Partnerships, PACET - Policy Reviews and Formulation, Advocacy, Capacity Building, Engagements, and Technical Assistance#5Debt Capital Market Development Project../2 Investors, Issuers and Intermediaries Education/Engagement Sub Co Sensitised market stakeholders via a webinar on the short-term financing option in the Nigerian debt markets Regulation Consolidation SubCo ■ Provided recommendations for the removal of restrictive regulations in the insurance sector to the House of Representatives Committee on Insurance and Actuarial Matters through the NIA. ■ The Consolidated Insurance Bill 2020 seeks to repeal, re-enact and consolidate the Insurance Act 2003 with other insurance related laws, and has gone through second reading and public hearing Key Next Steps Continuous capacity building sessions for market participants and stakeholders ■ Follow up on the implementation of the Sub-Committees' recommendations Note: SubCo - Sub-Committee, NIA -Nigerian Insurers Association, NAICOM National Insurance Commission -FMDQ Strategic Objectives Product /Investor Diversification Operational Efficiency Increased Market Size Enabling Environment#6Equity Market Project FMDQ's Equity Market Project will deliver a competitive and differentiated equities market underpinned by FMDQ's GOLD Agenda Market 0 Structure ☐ -FMDQ Technology-driven ■ End-to-end Automation Accelerated Settlement Vertically Integrated FMDQ Equity Platform Products & Services Segmentation ■ Tiers & Boards ■ Sectoral Diversification ■ Inclusive Governance ■ Enhancement of Market Corporate Governance ■ Robust Market Surveillance Transparent Market Note: GOLD Globally Competitive, Operationally Excellent, Liquid and Diverse 5#7FMDQ Group FMDQ Securities Exchange Limited FMDQ Clear Limited FMDQ Depository Limited 6 -FMDQ 6.#8Market Statistics Total Issuances | N'bn 37.41 440.07 -FMDQ OTC FX Futures and I&E FX Window DCM Outstanding Value 'trn 1.54 Inflows $'bn 0.10 18.28 372.91 93.10 691.30 126.66 2.10 0.13 19.07 160.00 10.00 990.35 335.82 2.40 67.33 0.11 22.69 27.70 Sovereign Bonds Corporate Bonds CPs ■ Q3 2020 ■ Q4 2020 Treasury Bills ■Q1 2021* OTC FX Futures Market Turnover I&E FX Window Inflow - FPIs DCM Outstanding Value ■ Q3 2020 ■ Q4 2020 ■Q1 2021* Q3 2020 Q4 2020 Q1 2021* 46.22 Q1 2021* Market Turnover | N❜trn 50.76 Q4 2020 FGN Savings Bond Issuances Q4 2020 Q3 2020 Q1 2021* 47.05 Tenor (N'mm) 2-Year 1,048.68 60.13 229.00 3-Year 1,707.12 491.13 583.22 Q3 2020 Total 2,755.80 551.26 812.22 S&P FGN Bond Index 670.28 S&P FGN Bond Index YTD (%) 39.30 -15.52 YTD 2021** FY 2020 566.24 YTD 2021** FY 2020 Note: DCM - Debt Capital Markets; FPIs - Foreign Portfolio Investments; I&E FX - Investors' and Exporters Foreign Exchange'; S&P - Standard & Poor's CPs- Commercial Papers; OTC - Over-the-Counter; FGN - Federal Government of Nigeria; Q1 2021* - Data as at March 19, 2021; YTD - Year to Date; YTD 2021** - Data as at March 19, 2021#9Key Market Development Initiatives S/N Initiative 1. Bilateral Repo with Collateral Management Project 2. FMDQ Derivatives Market Development Project RAG Status -FMDQ Phase(s) ☐ Market Documentation System Deployment Stakeholder Engagements ! Completion I Level 96% System Deployment Stakeholder Education Product Development ☐ Legal & Regulatory ■ Risk Management and Operational Readiness 1 Completion I Level 50% 3. Dealing Member (Specialist) Market (DMS) System Deployment 1 Completion I 50% Level 4. Brokers' Orderbook Surveillance System (BOSS) Note: RAG Status Completed Work-in-Progress Yet to Commence 8 Market Documentation System Deployment Stakeholder Engagement 1 Completion I 50% Level#10FMDQ Group FMDQ Securities Exchange Limited FMDQ Clear Limited FMDQ Depository Limited 9 -FMDQ 11.#11Journey to CCP -FMDQ FMDQ Clear has now become strategically positioned to provide Central Counterparty ("CCP") services in the near-term, as the required legal and regulatory basis have now been secured. Legal Basis B CAMA Netting Law and Bankruptcy Remoteness 2020 Regulatory Basis B Central Counterparty & Derivatives Market Rules SEC RULES 2019 FMDQ Clear has transitioned from a Central Clearing House to a Central Counterparty % Central Clearing House Clearing of bilateral trades Limited central risk management mechanisms that provide some level of settlement assurance Collateral management Note: CAMA - Corporate and Allied Matters Act, CCH - Central Clearing House 10 ☐ Central Counterparty All CCH activities Clear all kinds of cash and derivatives products Novates each transaction Additional risk management structure (Mutualised Default Fund) Multilateral netting#12Activation of CCP -FMDQ With the required legal and regulatory basis now in place, FMDQ Clear is activating key initiatives towards the planned roll-out of CCP services and de-risking the Nigerian financial markets. Multilateral Netting 1 Commence multilateral netting 3 FMDQC CCP CCP Clearing: Exchange- Traded Derivatives Onboard Clearing Members and activate CCP clearing Outstanding Approvals from SEC Clearing Member Rules Activation of Onboarding Process for Prospective Clearing Members 2#13FMDQ Group FMDQ Securities Exchange Limited FMDQ Clear Limited FMDQ Depository Limited 12 -FMDQ 14.#14Summary of Settlement Activities Value( N'bn) 5,000.00 -FMDQ 4,500.00 4,000.00 3,500.00 96% 90% 177.00 415.47 94% 207.84 93% 295.49 90% 3,000.00 307.11 2,500.00 2,000.00 4,310.22 3,943.79 3,869.30 3,436.37 1,500.00 2,701.42 1,000.00 500.00 89% 61.70 521.16 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 ■Settled Failed ■% of Settled Trades Transaction Volume 5,000 93% 4,500 90% 4,000 384 96% 240 422 90% 94% 3,500 395 273 3,000 2,500 2,000 4,109 3,860 3,799 1,500 2,998 3,091 89% 1,000 100 500 706 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 ■Settled Failed ■% of Settled Trades Note: As at March 12, 2021 13#15| | Settlement Guarantee Fund -FMDQ FMDQ Depository recognises the need to de-risk secondary market activities and corresponding service components that fall within its mandate. Conceptualisation and Delivery of a Settlement Guarantee Fund nearing completion with a financial market development company Participants' Engagement 14 + Regulatory Engagement#16Whol are Prod 2005 12 Thank you for your attention! =FMDQ Chng High Low P A Vertically Integrated Financial Market Infrastructure Group 245 15.90 436 25.50 63 53 204 EE 086