SEC Approves NGX Derivatives Contracts With Dangote, MTN, Others

The Securities and Exchange Commission has approved seven derivatives contracts for the Nigerian Exchange Limited.

The NGX disclosed in a statement that the approval was granted by the SEC on 28 June 2021.

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With the approval, the Exchange now manages 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 bourse planning to launch West Africa’s first Exchange Traded Derivatives (ETD) supported by NG Clearing in the risk management process.

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.

Some of the instruments include bonds, commodities, currencies, interest rates, market indices and stocks.

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It revealed that the contracts were made possible after it successfully registered NG Clearing with the SEC, as a premier Central Counterparty, effective 7 June 2021.

The NXG stressed that it has ensured widespread understanding of derivatives, its applicability and how investors can reap maximum value from the asset class.

“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.

“With these approvals, NGX is inching closer to launch West-Africa’s first Exchange Traded Derivatives supported by NG Clearing in the risk management process,” the Exchange said.

In view of the launch, Chief Executive Officer of the NGX, Temi Popoola, said, “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.

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“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.”

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