How Nigeria Can Attract Investors Through Derivatives — Infoware Limited CEO
The Chief Executive Officer of Infoware Limited, Uwa Agbonile, has said that the Nigerian Exchange Ltd will only attract millions of new investors when its Exchange Traded Derivatives (ETDs) offerings are globally competitive.
Agbonile said this at the NGX market data workshop 2021 which was monitored by THE WHISTLER.
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The CEO spoke on, ‘Bringing the next 2 million investors: Using Derivatives to Drive Liquidity’ into the capital market.
The exchange is introducing derivatives trading as a means of hedging against risk in the market.
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 basic principle behind a derivative contract is to earn profits by speculating on the value of the underlying asset at a future date.
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The underlying assets are bonds, currencies, commodities, interest rates, market indices and stocks.
The NGX in July 2021 said it received approval for seven derivatives contracts from the Securities and Exchange Commission.
The approved contracts are Dangote Cement Plc Stock Futures, Access Bank Plc Stock Futures, Guarantty 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 CEO of Infoware explained that in Nigeria, investors are risk averse, a sentiment that has discouraged them from the stock market.
