The Nigerian Stock Exchange (NSE) on Tuesday, February 4, organised a workshop on the legal and regulatory requirements of Derivatives trading for capital market operators.
In anticipation of Derivatives trading on the Exchange, the NSE had released a derivatives market rule book that will serve as a guide for trading derivatives on the bourse.
The Securities and Exchange Commission had earlier stated that developing an efficient derivatives trading market is one of the top priorities of the Commission in 2020.
Derivatives are securities that derive their value from an underlying security or asset.
The aim of the workshop held at the Exchange House in Lagos and organised in collaboration with the Securities and Exchange Commission (SEC) was to guide market participants to properly interpret the approved Exchange traded derivative rules and recently released SEC’s derivatives and clearing rules, as well as address concerns on the on-boarding process.
Delivering the opening remarks at the workshop, Oscar N. Onyema, Chief Executive Officer, NSE said, “The introduction of Exchange- trade derivatives on our bourse is aimed at broadening the options available to support efficient implementation of risk management and investment strategies across diverse asset classes and financial instruments. We are, therefore, delighted to host this event in recognition of the importance of capacity building and investor education to the development of this asset class.”
“We are working tirelessly to ensure that our Derivatives market remains aligned with International Organization of Securities Commission (IOSCO) principles by facilitating access to recognized and licensed derivative products, world class market surveillance technology, effective trading rules as well as appropriate risk management and clearing facilities.”
Speaking on the rules guiding the derivatives market, Head of Department, Registration, Exchanges, Market Infrastructures and Innovation at the SEC, Emomotimi Agama said, “The NSE and SEC have provided the platform and requisite rules to guide activities in the Derivatives market.”
He said, “It is, therefore, the responsibility of capital market operators to work with us to galvanise activities within this market segment. Furthermore, interested dealing members or clearing houses must build strong capacity to deliver on investor education, proper legal frameworks, effective risk management procedures, and advanced reporting standards to engage in Derivatives Trading for the safety & security of investors.”
In providing guidance on the legal framework guiding Derivatives Trading, Michael Dugeri, Senior Associate at Austen Peters emphasised the importance of market integrity, financial integrity and investors’ protection.
As part of its commitment to building required infrastructures for derivatives market in Nigeria, the Exchange also announced a partnership with Central Securities Clearing System Plc (CSCS) to launch NG Clear, a world class central clearing counterparty (CCP) entity. The establishment of this CCP entity meets EMIR standards in Nigeria and is in line with G20 programme to reform global financial regulation.
