NGX Launches West Africa’s first Exchange Traded Derivatives Market

The NGX has launched its Exchange Traded Derivatives (ETDs) Market, with the listing of two Equity Index Futures Contracts, NGX 30 Index Futures and NGX Pension Index Futures.

This milestone is a critical step towards its repositioning effort to further consolidate its place, as the sustainable Exchange championing Africa’s growth.

NGX ETDs Market, the first in West Africa, is part of efforts to build a market that is dynamic, innovative, and responsive to the growing demands of domestic and foreign investors.

In specifics, the ETDs market will complement existing asset classes, by providing investors and other market players with the necessary tools for tactical asset allocation. Ii is expected to attract foreign capital flow, reduce the cost of capital and deepen the market.

The Exchange kicked off the Derivatives project in 2015 following a market-wide feasibility study concluded in 2014, which pointed to prospects for product creation in the equity, debt, currency, energy, and commodity markets.

“The successful completion and subsequent launch of this project is therefore a victory for everyone and a testament to our capacity, for partnerships, collaboration, and consolidation of previous efforts,” the NGX said.

To promote clearing efficiency, stability, and confidence, the Exchange has collaborated with a premier Central Counterparty (CCP) in Nigeria, NG Clearing Limited, to provide the clearing infrastructure for NGX Derivatives Market and its clearing members – Access Bank and Zenith Bank.

The ETDs Market commenced with trading activities recorded by three Derivatives Trading License Holders – Cardinal Stone Securities Limited, Meristem Securities Limited, and APT Securities and Funds Limited – who have been cleared by NGX Regulation Limited to facilitate transactions on behalf of investors on NGX Derivatives Market.

The contracts traded are the NGX30 Futures for June 2022, and NGXPENSION for September 2022. Other listed contracts available for trading are NGX30 Futures for September 2022, NGXPENSION for June 2022.

“NGX will continue to introduce more Futures Contracts based on market demand, and offer market participants a deep and liquid marketplace to invest or hedge their portfolio,” it said.