Nigerian Exchange, NG Clearing engage trading license holders on Derivatives Trading

As Nigerian Exchange (NGX) Limited inches closer to the launch of Exchange Traded Derivatives (ETDs) in the Nigerian capital market, it continues to engage with the capital market ecosystem.

In collaboration with NG Clearing (NGCL), NGX hosted an engagement session with Trading License Holders (TLHs) on Tuesday, August 24, 2021.

Speaking at the session, Jude Chiemeka, Divisional Head, Trading Business, NGX noted that, “NGX in its quest to be Africa’s preferred Exchange hub, recognises the importance of a well-developed Derivatives market and has worked assiduously to build the regulatory and technology framework and competence required to support the launch of a standardized ETDs market. We are confident that the Derivatives market will complement existing cash markets and provide investors and other market players with the necessary tools for tactical asset allocation, risk management and cost management for effective portfolio management. Our adoption of a best in class Central Counterparty (CCP) and Clearing House, NG Clearing, further engenders confidence in the ETD Market segment amongst market participants, as the clearing infrastructure being set up will be of international standards capable of reducing systemic risk and enhancing market transparency.”

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During the session, Chidinma Chukwueke-Okolo, Head, Derivatives Markets, NGX provided TLHs with information on their roles, as well as the minimum operating standards for participating in the Derivatives market. Areas where TLHs must show competence across the following areas: manpower & equipment, organisational structure & governance, effective processes, global competitiveness, and technology.

Ayokunle Adaralegbe, Chief Operating Officer, NGCL also shared insights into the approach to clearing in the Derivatives market.

The derivatives market continues to be the largest single segment of the global financial market and has been estimated to be more than five times larger than global equity and bond markets. Local and international players in the derivatives market space, therefore, continue to anticipate the launch of ETDs in the market and are keeping a keen eye on the activities of NGX in this regard.