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Market Development
Overview
The Market Development Department (MDD) or Department was created in January 2008. Prior to this time, the Department was a Unit in the Portfolio Management Department. The Department was created based on the need to give a sharper focus to the development of the sovereign bond market in particular and the domestic bond market at large. MDD’s primary responsibility is to build on the successes achieved by the DMO in the Primary and Secondary Markets with the ultimate objective of building “a first-rate and internationally competitive bond market”. Following the DMO’s broader strategic intent, the role of the Department is now anchored on two pillars which are: “To develop innovative approaches for optimally accessing domestic finance “ and “To deepen and broaden the FGN Securities Market in order to sustain the development of other segments of the Bond Market and support Government’s financing needs’’.
Functions of Market Development
To achieve the above Objectives, the MDD is charged with the following responsibilities:
Deepening the Investor Base
A large and diversified investor base is required to support a growing bond market. The Department is charged with increasing and diversifying the investor base for FGN Bonds in particular, and also sub-national and corporate bonds in general through various means, including public enlightenment programmes.
Development of New Products
Development of new products, such as Inflation-Linked Bonds, Zero Coupon Bond, bonds with Options and Non-Interest Bearing Securities, which are required to attract new investors and meet the various investment preferences or objectives of different investor groups. The issuance of securities in the International Capital Market such as Eurobonds, Global Depository Notes and Diaspora Bond are some other product development initiatives.
Monitoring and Regulation of the Sovereign Bond Market
The Department is responsible for the supervision of Primary Dealer Market Makers in line with the DMOs “General Rules and Regulations Governing the Primary Dealer Market Maker (PDMM) System in Federal Government of Nigeria (FGN) Securities” as amended from time to time. MDD is also charged with issuing the Operational Guidelines governing the operations of the sovereign bond market. The Department is responsible for securing endorsements (such as inclusion in International Indices) and concessions that would support the development of the domestic FGN Securities market.
Support the Development of the Sub-national and Corporate Segments of the Domestic Bond Market
The Department is actively involved in initiatives, policies and activities targeted at encouraging the growth of the Corporate and Sub-national segments of the bond market in recognition of the developmental role of the DMO. In this regard, the Department actively engage local and international stakeholders to ensure vibrant FGN securities markets. MDD serves as the Secretariat for the Bond Market Steering Committee (BMSC) and the Monetary and Fiscal Policy Co-ordinating Committee (MFPCC) and is a member of the Capital Market Committee of the Securities and Exchange Commission. This is in recognition of the need for the harmonisation of fiscal, and monetary policies with government’s debt strategy, in order to achieve stability in the financial markets (particularly the fixed income securities segment). The Department also represents the DMO in other standing and adhoc committees charged with similar objectives.
Departmental Structure
The Market Development Department is made up of two Units. These are Market Research and Intelligence and Product Development Unit (MRI&PDU) and Market Planning, Regulation and Supervision Unit (MPRSU).
Market Research Intelligence and Product Development Unit (MRI&PDU)
The Unit focuses on three job functions: Research and Intelligence on the domestic and external securities markets, Product Development and, Stakeholder engagement on Government Policies.
The first relates to collecting data and information on the financial markets (money, equity, bonds and foreign exchange), as well as, other macroeconomic indicators and analyzing them to guide the DMOs operations in the domestic and external securities markets.
The Unit is responsible for the preparation of Frameworks for the introduction of new products into the domestic and external securities markets on behalf of the DMO. The unit is also responsible for securing the required approvals and implementing the initiatives.
The Unit is the focal point for articulating and following through on policies and legislations (including changes thereto) required for deepening the market for FGN s ecurities, corporate and sub-national bonds. In this regard, the Unit has regular interactions with all relevant stakeholders.
Market Planning, Regulation and Supervision Unit (MPRSU)
The Unit’s responsibilities include : Collaborations with other market stakeholders on issues that impact on the domestic bond markets, with emphasis on diversifying the domestic bond market in terms of products and investors, Monitoring and supervision of the DMO’s Primary Dealer Market Makers and Government Stockbroker, Monitoring trends in the domestic bond market and supporting market initiatives with a view to achieving stability, active trading in FGN Securities and the adoption of international best practices in market infrastructure, Organizing activities of the Monetary and Fiscal Policy Coordinating Committee, Coordinating activities relating to sovereign Issuances in the International Capital Market, Managing investor relations as well as keeping records of investor participation in FGN Securities.
