Nigerian Exchange Starts Derivatives Trading

Nigerian Exchange Starts Derivatives Trading

By Bashir Olanrewaju

Nigerian Exchange, the country’s capital market, started trading in derivatives on Thursday in it’s bid to boost the size of the market.

Known as NGX Exchange-Traded Derivatives Market, it opened trading with two securities: the NGX 30 Index Futures and the NGX Pension index Futures. They’re the first in West African bourse to introduce derivatives, the exchange said in a statement.

The launch of NGX ETD Market saw the listing of two Equity Index Futures Contracts, NGX 30 Index Futures and NGX Pension Index Futures, with
Cardinal Stone Securities Limited, Meristem Securities Limited and APT Securities and Funds Limited licensed by NGX Regulation Limited to conduct transactions for investors.

“A strong pillar in our strategy is to enhance liquidity and expand market capitalisation to the end that we create value for stakeholders, and the introduction of ETDs is a critical step in the right direction,” said Yemi Popoola, chief executive officer of the Nigerian Exchange.

Derivatives are tradable contracts spun out of underlying securities such as bonds, stocks, index funds and other market assets. Transactions such as futures and forward contracts as well as swaps and options fall within the category of derivatives