By Aduragbemi Omiyale

The mood at the Nigerian Exchange (NGX) Limited on Customs Street, Lagos is full of excitement and the reason is not far-fetched.

The local stock exchange is launching today, Thursday, April 14, 2022, the first exchange-traded derivatives (ETD) market in West Africa, featuring equity index futures.

The launch of the NGX ETD market saw the listing of two equity index futures contracts; NGX 30 Index Futures and NGX Pension Index Futures, with more titles to be added in the future.

To promote clearing efficiency, stability and confidence, the exchange has collaborated with a leading central counterparty (CCP) in Nigeria, NG Clearing Limited, to provide the clearing infrastructure for NGX Derivatives Market and its members. clearing houses – Access Bank and Zenith Bank.

The ETD market will commence with the trading activities of the first three trading licensees – Cardinal Stone Securities Limited, Meristem Securities Limited and APT Securities and Funds Limited – which have been authorized by NGX Regulation Limited to facilitate trading on behalf of investors on NGX Derivatives Market.

This development by NGX is in line with its commitment to develop the Nigerian capital market by providing a market that thrives on innovation and meets stakeholders’ needs to access and use capital.

NGX Chairman and Chief Executive Officer (CEO), Mr. Temi Popoola, commended the efforts of stakeholders who have successfully led the completion of the derivatives market since 2014.

“I would like to particularly acknowledge the work that was done under the previous leadership of the Exchange, led by Mr. Oscar Onyema, whose contributions formed the foundation of our current gains and achievements made manifest by the launch of the ETD market. NGX.

“NGX remains committed to building an exchange capable of meeting the increasingly sophisticated needs of domestic and foreign investors.

“A strong pillar of our strategy is to improve liquidity and expand market capitalization to create value for stakeholders, and the introduction of ETDs is a crucial step in the right direction.

“The platform will play a vital role in broadening and deepening the market, further boosting NGX’s leadership position as Africa’s preferred exchange hub.”

“Our partnership with best-in-class central counterparty, NG Clearing Limited, further builds confidence in the ETD market segment among market participants, as the clearing infrastructure is capable of reducing systemic risk and improving market transparency,” he added.

On his part, Mr. Tapas Das, Managing Director of NG Clearing, said, “The launch of the derivatives market in Nigeria is a testament to the maturity of our market, a sign that the market has matured and is ready to go. the transition. in a new era.

“Derivatives market risks will be managed through NG Clearings’ technology-based clearing and settlement, collateral management and risk management offerings as critical financial market infrastructure ( IMF) of the central counterparty (CCP)”.

ETDs are standardized, highly regulated and transparent financial contracts, listed and traded on a securities exchange, and guaranteed against default through the derivatives exchange’s clearing house.

NGX’s ETD market will complement existing asset classes, provide investors and other market participants with the tools needed for tactical asset allocation, as well as improve risk and cost management for portfolio management. efficient.

It will further enhance the participation of domestic and international investors in the Nigerian financial markets, which will have a positive impact on the performance of the economy.

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