Nigeria Exchange, NGX Starts W.A.’s First Traded Derivatives Market

Nigeria Exchange, NGX Starts West Africa’s First Exchange Traded Derivatives Market

On April 14, 2022, Nigerian Exchange Limited (NGX or the Exchange), the sustainable Exchange advocating Africa’s progress, will launch West Africa’s first Exchange Traded Derivatives (ETD) Market featuring Equity Index Futures Contracts. This is in line with the Exchange’s objective to developing the Nigerian capital market by creating a system that thrives on innovation and reacts to stakeholders’ requirements for capital access and use.

With the opening of the NGX ETD Market, two Equity Index Futures Contracts, NGX 30 Index Futures and NGX Pension Index Futures, were introduced to the market, with more to come in the future. The Exchange has partnered with NG Clearing Limited, a leading Central Counterparty (CCP) in Nigeria, to offer clearing infrastructure for the NGX Derivatives Market and its clearing members, Access Bank and Zenith Bank, in order to improve clearing efficiency, stability, and confidence. The first three Trading License Holders – Cardinal Stone Securities Limited, Meristem Securities Limited, and APT Securities and Funds Limited – who have been cleared by NGX Regulation Limited to facilitate transactions on behalf of investors on the NGX Derivatives Market will begin trading on the ETDs Market.

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Temi Popoola, the CEO of NGX, spoke about the debut and praised the efforts of stakeholders who have successfully led the completion of the Derivatives Market since 2014. “I’d want to express my gratitude for the work done by the Exchange’s former management, led by Oscar N. Onyema OON, whose efforts laid the groundwork for our current gains and successes, as seen by the introduction of the NGX ETDs market.”

NGX is committed to continuing to develop an exchange that can meet the increasingly complex demands of local and international investors. Enhancing liquidity and expanding market capitalisation are important pillars of our strategy for creating value for stakeholders, and the launch of ETDs is a key step in the right direction. The platform will be critical in widening and developing the market, bolstering NGX’s leadership position as Africa’s preferred exchange centre.”

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“Our relationship with NG Clearing Limited, a best-in-class Central Counterparty, instils even more trust in the ETDs market sector among market players, as the clearing infrastructure is capable of decreasing systemic risk and improving market transparency,” he said.

“The introduction of the derivatives market in Nigeria is a testimonial to the maturity of our market, a sign that the industry has come of age and is ready to move into a new era,” Tapas Das, Chief Executive Officer of NG Clearing, stated. As a crucial Central Counter Party (CCP) Financial Market Infrastructure (FMI), NG Clearings will manage the risks associated with the derivatives market through its powerful technology-enabled Clearing and Settlement, Collateral Management, and Risk Management capabilities.”

ETDs are financial contracts that are standardised, highly regulated, and transparent, and are published and traded on a securities exchange, with the clearing house of the derivatives exchange guaranteeing them against default. The NGX ETDs market will supplement existing asset classes, give investors and other market participants the tools they need for tactical asset allocation, and improve risk and cost control for better portfolio management. It would increase local and foreign investor engagement in Nigeria’s financial markets, which will have a favourable influence on the economy’s performance.

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