• Friday, March 29, 2024
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BusinessDay

Nigeria’s Exchange Traded Products space records growth

NSE members assent to Demutualisation

Nigeria’s Exchange Traded Products (ETPs) space has grown steadily by a cumulative average growth rate of 8 percent over the last 4 years, said Oscar Onyema, Chief Executive Officer, Nigerian Stock Exchange (NSE).

Onyema said the cross-listing of ABSA’s Newgold Exchange Traded Fund (ETF) on the Nigerian Stock Exchange in December 2011 opened up the ETPs market.

Currently, there are nine (9) ETPs listed on the Exchange – 2 thematic ETFs providing access to Pension-compliant and Shariah-compliant stocks, 2 broad equity market ETFs tracking the NSE 30 Index, 3 sector based ETFs, 1 commodity ETF, and 1 bond ETF tracking exposure to benchmark FGN Sovereign Bonds.
The NSE CEO disclosed all these on Wednesday December 5 in Lagos at the 2018 Exchange Traded Products conference where he said that the introduction of ETPs is one of the Exchange’s strategy to enhance diversification “as well as broaden the options available in the capital market to support the efficient implementation of investment strategies across diverse asset classes and instruments”.
The theme of the ETPs conference is “Exchange Traded Products: Evolving investment themes, Accessing New Markets and Enhancing Portfolio Alpha”.
In the last 15 years, investors’ demand for ETPs (both retail and institutional) has grown remarkably, which in turn has led to a greater variety of products offered by ETP sponsors, he noted.

Globally, ETPs have grown remarkably this year recording net flows of approximately $358billion as at October 2018. According to ETFGI, the Global ETP industry had close to 15,000 ETPs listings on 71 exchanges with assets of about $5trillion cutting across 392 providers at the end of October 2018.

“It is interesting to note that equity-based ETPs make up 76.7percent of global ETP listings whilst Fixed Income based ETPs represent 16.7percent of listings, similar to the asset split in Nigeria”, Onyema added.

The NSE CEO used the medium to encourage ETP product issuers and intermediaries to expand their footprint by broadening distribution channels, introducing other asset classes/strategies, entering new markets, leveraging technology and data analytics to understand the market and demand.

“This year, in collaboration with issuers, we have focused on diversifying the ETPs space by supporting new product development and thus expect the launch of new ETPs in the short term”, he added.

Participants at the conference expanded the discourse on ETPs in terms of enhancing domestic capacity as well as improving collaboration amongst participants in the ecosystem – product strategists, issuers, intermediaries, advisers, investment managers and investors.

Discussions at the conference include amongst other things to: identify solutions to challenges in the domestic market, as well as consider the potential for cross border listing of securities in Africa; expand the dialogue regarding the integration of African Financial Markets via the issuance of ETP vehicles and Depository receipts; provide the investment advisory and broker-dealer community with an understanding of their roles in distribution and capital mobilization, as well as; and provide direction to ETP Issuers to support product development efforts in the medium term.

ETPs are one of the most significant financial innovations in recent decades and have shaped the financial markets. Since the introduction of ETPs in 1993, they have gained widespread acceptance in most developed markets.