Nigeria Stock Exchange Receives SEC Approval for Seven Derivatives Contracts

The Nigerian Exchange Limited (NGX) says it has Securities and Exchange Commission (SEC) approval for seven derivative contracts, a path towards launching the first exchange-traded derivatives in West Africa.

Lagos-based NGX on Monday got regulators nods for contacts including 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, according to a statement released Friday on the stock exchange website.

Financial securities whose value is derived from an underlying asset or group of assets that serves as a benchmark, derivatives are a contract between two or more parties and their prices are determined by movements in the underlying assets. Underlying assets for derivatives include currencies, bonds, commodities, stocks, market indices and interest rates.

The development follows the SEC’s registration of the NG Clearing as a leading central counterparty effective June 7.

ALSO READ:Nigerian Equities Gain N163 Billion in Renewed Interest in Major Industrial, Energy Stocks

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 raising and using capital, said Temi Popoola, CEO of NGX Limited, ahead of the launch of derivatives.

We are therefore excited about the prospects of deepening Africa’s position in global financial markets through ETDs, as well as improving liquidity and reducing price, duration and other financial risks that may arise from advanced financial transaction activities.