The Nigerian Exchange Limited (NGX) says it has the approval of the Securities and Exchange Commission (SEC) for seven derivative contracts, a path to its launch of the first exchange-traded derivatives in West Africa.
The Lagos-based NGX got the regulator’s nod on Monday 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 published on the exchange’s website on Friday.
Basically financial securities whose value is derived from an underlying asset or group of assets serving as a benchmark, derivatives are a contract between two or more parties, and their prices are determined by fluctuations in the underlying assets. Underlying assets for derivatives include currencies, bonds, commodities, stocks, market indexes and interest rates.
The development comes on the heels of registration of the NG Clearing by SEC as a premier Central Counterparty with effect from June 7.
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“The launch of the derivatives market aligns with our commitment to building a market that thrives on innovation and responds to the needs of stakeholders in accessing and using capital,” said NGX Limited CEO Temi Popoola ahead of the derivatives launch.
“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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