Overview

The Market Development Department (MDD) was created in January 2008. Prior to this time, the Department was a Unit in the Portfolio Management Department. The Department was created based 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”.

     To achieve this objective, the MDD is charged with the following responsibilities:

1. 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.
2. Development of New Products: New products such as Index-Linked and Zero Coupon Bonds as well as bonds with Put Options are required to attract new investors and meet the various investment preferences/objectives of different investor groups. The issuance of Naira-denominated bonds in the International Capital Market as well as Global Depository Receipts are some other products that are being considered.
3. Regulation of the Sovereign Bond Market: The Department is responsible for the monitoring and 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”. The Department is also charged with issuing Operational Guidelines for the sovereign bond market.
4. Support the Development of the Sub-national and Corporate Segments of the Domestic Bond Market: In recognition of the developmental role of the DMO, the Department is actively involved in initiatives, policies and activities targeted at encouraging the resurgence of these segments of the bond market. For this purpose, the Department serves as the Secretariat for the Bond Market Steering Committee and is a member of the Capital Market Committee of the Securities and Exchange Commission. Under the umbrella of these two (2) Committees, the Department also promotes the introduction of new products such as Mortgage Backed Securities (Real Estate Investment Trust) and Asset Backed Securities.
5. Promoting Stability in the Financial Markets: In recognition of the need for the harmonisation of fiscal, and monetary polices with government’s debt strategy, in order to achieve stability in the financial markets (particularly the fixed income securities segment), the Department serves as the Secretariat of the Monetary and Fiscal Policy Coordinating Committee. The Committee is charged with promoting stability in the financial markets, especially the fixed income securities.

Departmental Structure

1. Market Research, Intelligence and Product Development Unit: The Unit is made up of two (2) Sections: Market Research and Intelligence as well as Product Development. The former is responsible for collecting data and information on the financial markets (money, equity, bonds and foreign exchange) as well as the macroeconomy and analysing them to guide the DMOs operations in the bond market. Product Development on the other hand is responsible for initiating new products and enlarging the investor base for bonds. The two (2) Sections work closely with other departments in the DMO notably Portfolio Management Department and stakeholders in the Capital Market such as the Central Bank of Nigeria (CBN), Central Securities Clearing System (CSCS), Securities and Exchange Commission (SEC), The Nigerian Stock Exchange (NSE), National Pension Commission (PENCOM), Federal Inland Revenue Service (FIRS), and National Insurance Commission (NAICOM). Product Development is also the co-ordinator of all issues and activities involving development partners such as the World Bank and the International Finance Corporation.
2. Market Planning Unit: This Unit is responsible for managing relationships and issues that impact on the domestic bond markets in general. The Unit handles all issues relating to the Bond Market Steering Committee, the Monetary and Fiscal Policy Co-ordinating Committee and Interactive Sessions with PDMMs. The Unit is the focal point for articulating and the following through on policies and legislations (including changes thereto) required to deepen the market for corporate and sub-national bonds. In this regard, the Unit has regular interactions with SEC, CBN, NSE, PENCOM, FIRS, NAICOM and the National Assembly.
3. Market Regulation and Supervision Unit: The Unit’s core functions are to monitor the performance of the PDMMs to ensure that they comply with the DMO’s Guidelines governing their operations in the FGN bond market. To perform this function, the Unit undertakes periodic reviews of the activities of each PDMM in the Primary and Secondary Markets and conducts offsite inspections.