The Nigerian Exchange (NGX) says the Securities and Exchange Commission has approved Access, Dangote, GTB, MTN, and Zenith derivatives contracts.
Temi Popoola, CEO NGX, disclosed in a statement on Friday that SEC approved the contracts on June 28.
The approved contracts were Access Bank Plc Stock Futures, Dangote Cement Plc Stock Futures, Guaranty Trust Bank Plc Stock Futures, MTN Nigeria Communications Plc Stock Futures, Zenith Bank Plc Stock Futures, NGX 30 Index Futures, and NGX Pension Index Futures.
The announcement followed the registration of NG Clearing by SEC as a premier ‘Central Counterparty,’ effective June 7.
Mr Popoola stated:
The launch of the derivatives market aligns with our commitment to build a market that thrives on innovation and responds to the needs of stakeholders in accessing and using capital. We are, therefore, excited about the prospects of deepening Africa’s position in the global financial markets through ETDs.
As well as enhancing liquidity and mitigating against price, duration and other financial risks that may arise from sophisticated financial transactional activities.
NGX has collaborated with both local and international organisations such as SEC, JPMorgan Chase, CBOE Options Institute, and NG Clearing to facilitate in-depth capacity building programme on the derivatives market.
In addition, through its learning and development arm, X-Academy, NGX has hosted training to prepare capital market players who wish to undertake the Chartered Institute for Securities & Investment UK Global Derivatives qualification exam and is on track to host further training for other stakeholders in the near term.
A derivative is a contract between two or more parties whose value is based on an agreed-upon underlying financial asset or group of assets.
The common underlying instruments include bonds, commodities, currencies, interest rates, market indices, and stocks: the basic principle behind a derivative contract is to earn profits by speculating on the underlying asset’s value at a future date.
Derivatives are used as a risk management instrument and are suited to both professional and private investors.