Nigeria’s financial markets opened 2026 on a strong footing, with total transactions on the FMDQ platform soaring to N60.77tn in January, underscoring heightened liquidity conditions and renewed institutional participation.
The impressive performance reflects a market increasingly dominated by foreign exchange transactions and short-term money market instruments, as investors navigate evolving macroeconomic conditions and reposition portfolios for the new fiscal year.
Data released in the latest FMDQ Spotlight report shows that the FMDQ turnover surge was largely driven by activities in the foreign exchange segment, particularly spot and derivatives transactions, which accounted for the largest share of total market turnover during the period.
FX segment powers FMDQ turnover surge
Foreign exchange trades emerged as the primary engine behind the FMDQ turnover surge, contributing approximately 31.81 per cent of the total transaction value recorded in January. This trend highlights the growing importance of currency markets in Nigeria’s financial ecosystem, especially amid ongoing exchange rate adjustments and policy reforms.
Market analysts attribute the spike in FX activity to sustained demand from corporates and financial institutions seeking to hedge currency risks, manage liquidity positions, and take advantage of arbitrage opportunities in the evolving forex regime.
Closely following the FX segment were repurchase agreements, which accounted for 23.15 per cent of total turnover. These instruments, commonly used for short-term borrowing and liquidity management, have gained traction among banks and institutional investors looking to optimise cash positions in a volatile interest rate environment.
Open Market Operations bills also recorded significant traction, with transactions exceeding N19.33tn, further reinforcing the dominance of money market instruments in shaping overall trading activity.
Fixed-income instruments take a back seat
In contrast to the strong performance of FX and liquidity-driven instruments, traditional fixed-income securities such as Federal Government bonds and Treasury bills recorded relatively modest participation.
FGN bonds accounted for just 7.48 per cent of the total turnover, while Treasury bills contributed 7.04 per cent, indicating a shift in investor preference away from longer-duration assets toward more flexible and short-term instruments.
This shift aligns with broader market sentiment, where investors are prioritising liquidity and quick turnover in response to uncertainties surrounding inflation, interest rates, and global economic developments.
The FMDQ turnover surge therefore reflects not only increased activity but also a structural adjustment in how market participants allocate capital across asset classes.
Lagos green bond listing boosts market depth
A major highlight during the review period was the listing of new debt instruments by the Lagos State Government, further deepening Nigeria’s capital market.
The state successfully introduced a N14.82bn five-year Series 3 fixed-rate green bond, alongside a N230bn ten-year Series 4 fixed-rate bond. The issuance is widely regarded as a significant milestone in the promotion of sustainable finance and infrastructure funding within the country.
Analysts note that the green bond, in particular, signals growing investor interest in environmentally focused projects and aligns with global trends toward climate-conscious investments.
On the corporate side, several institutions also tapped into the market to raise short-term funds. Accion Microfinance Bank listed a N2.02bn commercial paper, while major players such as UAC of Nigeria Plc, Citibank Nigeria, and Johnvents Industries collectively issued commercial papers worth over N100bn.
These developments contributed to the overall FMDQ turnover surge, as new listings and issuances expanded the range of tradable instruments available to investors.
Market concentration remains high
Despite the broad-based increase in activity, the Nigerian financial market continues to exhibit a high level of concentration among a few dominant players.
According to the report, the top ten dealing member banks accounted for 72.85 per cent of the total turnover, translating to about N44.27tn. Even more striking is the dominance of the top three institutions, which together contributed nearly 53 per cent of the trading volume within the top ten category.
Leading the pack were Stanbic IBTC Bank Limited, Coronation Merchant Bank Limited, and First Bank of Nigeria Limited, whose combined activities underscore their significant influence on market direction and liquidity flows.
This concentration highlights the central role of large financial institutions in driving the FMDQ turnover surge, while also raising questions about market inclusiveness and the participation of smaller players.
Outlook: Sustained liquidity, cautious optimism
Looking ahead, market operators remain cautiously optimistic about the trajectory of trading activity on the FMDQ platform. The continued expansion of clearing and settlement infrastructure is expected to support market efficiency and boost investor confidence.
Industry stakeholders believe that sustained collaboration among regulators, financial institutions, and market participants will be critical in maintaining the current momentum and deepening liquidity across all segments.
Furthermore, increased activity in infrastructure financing and sustainable energy projects is likely to drive future issuances, particularly as government and private sector players seek innovative funding solutions.
However, analysts warn that external shocks, including global economic volatility and geopolitical tensions, could influence market dynamics in the coming months.
Nonetheless, the strong start to the year, as reflected in the FMDQ turnover surge, positions Nigeria’s financial markets for continued growth, provided that policy stability and investor confidence are sustained.
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