NSE Intensifies Efforts To Introduce Derivatives

As investors anticipate the launch of Derivatives trading in the Nigerian capital market, the Nigerian Stock Exchange has said it continues to lay the groundwork to build a standardised derivatives market.

It said part of these efforts included capacity building sessions such as the virtual derivatives workshop, which was organised by the Exchange.

NSE, in a statement, said the training was themed ‘Adopting derivatives during stressed market conditions.’

Speaking at the webinar, the Chief Executive Officer, NSE, Mr Oscar Onyema, said, “The global financial market has seen good growth and innovation over the past 20 years, and derivatives have contributed substantially to this impressive development. Today, the global derivatives market is the main pillar of the international financial system and the economy as a whole.

“The Exchange, in its quest to be Africa’s preferred Exchange hub, recognises the importance of a well-developed Derivatives market and has worked assiduously to build the regulatory and technology framework as well as the competence required to support the launch of a standardised Exchange Traded Derivatives market.”

A derivatives consultant, Charles Rubin, highlighted the unique benefits of derivatives trading, said, “Derivatives have been known to increase trading activity significantly across markets.

“For instance, the National Stock Exchange of India is witnessing trading activity 25 times more than pre-derivative levels in its 8th year since introducing derivatives.

“This accounts for four times more than its cash business. Markets are likely to continue to enjoy such activity due to the fact that derivatives provide a hedge against risk, facilitate short selling and allow investors to undertake leveraged buying and selling.”

The Exchange began its journey to launching ETDs in 2014 with a feasibility study, which showed that the Nigerian capital market was ready for the more sophisticated investment products ETDs would introduce.