The Nigerian Exchange (NGX) has announced the opening of Equity Index Futures Contracts, the first Exchange Traded Derivatives (ETD) market in West Africa. This is in line with the Exchange’s objective of strengthening the Nigerian capital market by creating a market that thrives on innovation and responds to stakeholders’ requirements for capital access and use.
With the launch of the NGX ETD Market, two Equity Index Futures Contracts, NGX 30 Index Futures and NGX Pension Index Futures, were added 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 provide 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.
Temi Popoola, CEO, NGX: “I would like to specially acknowledge the work that was done under the previous management of the Exchange, led by Mr. Oscar N. Onyema OON, whose contributions have formed the foundation of our present gains and accomplishments made manifest through the launch of NGX ETDs market. NGX remains committed to building an exchange that can cater to the increasingly sophisticated needs of domestic and foreign investors. A strong pillar in our strategy is to enhance liquidity and expand market capitalization to the end that we create value for stakeholders, and the introduction of ETDs is a critical step in the right direction.
“The platform will play an essential role in broadening and deepening the market, adding new impetus to NGX’s leading position as Africa’s preferred exchange hub. Our partnership with best in class Central Counterparty, NG Clearing Limited, further engenders confidence in the ETDs market segment amongst market participants, as the clearing infrastructure is capable of reducing systemic risk and enhancing market transparency.”
“The introduction of the derivatives market in Nigeria is a monument to the maturity of our market, a sign that the industry has come of age and is ready to transition into a new era,” says Tapas Das, CEO of NG Clearing.
“As a major Central Counter Party (CCP) Financial Market Infrastructure (FMI), NG Clearings’ sophisticated technology-enabled Clearing and Settlement, Collateral Management, and Risk Management capabilities will control the risks associated with the derivatives market.”
ETDs are financial contracts that are standardized, highly regulated, and transparent, and are listed and traded on a securities exchange, with the clearinghouse 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 domestic and international investor participation in Nigeria’s financial markets, which will have a favorable impact on the economy’s performance.