Nigerian Stock Exchange Bullish on Exchange Traded Derivatives Market


Nigeria will soon witness a robust Exchange Traded Derivatives (ETD) market that can support the growth of country’s ambitions, the Nigerian Stock Exchange (NSE) has said. An ETD is a financial instrument whose value is based on the value of another asset, and that trades on a regulated exchange. Futures and options are two of the most popular ETDs. The NSE is planning to launch its ETDs. Speaking at the a training seminar on the ‘Legal and Risk Aspects of Derivatives and Central Counterparty Clearing (CCP) Transactions, in Lagos, General Counsel and Head of Regulation at the NSE, Tinuade Awe said that Nigeria’s ETD initiative will eventually develop into a robust market place that can support our growth ambitions as a nation, using South Africa as an example of Africa’s first derivative market.

According to her, the concept of derivatives remains relatively novel in the Nigerian financial market space and has only been noticeable within the Over-The-Counter (OTC) segment of the market.

She explained that the frontiers of the Nigerian financial market is expected to grow exponentially due to enhanced liquidity arising from the development of new and intricate financial instruments.

“Given the open and transparent financial market place the NSE offers to a wide range of domestic and international investors, it is expected that all participants must have the commensurate capacity and knowledge-base to deal with the intricacies and the sometimes esoteric features of derivatives,” she said.

Awe explained that the training is one of many designed by the NSE under its X-Academy, which is the learning center of the exchange. The X-Academy offers a wide range of courses geared towards bridging the knowledge gap of investors, capital market operators and the general public about products and services of the capital market, whilst enhancing financial literacy and inclusion. This training seminar could not have come at a better time than now, particularly that the exchange is concluding plans to launch its ETDs,” she said.

Awe noted that the exchange has taken a bold step towards providing a strong capacity base in anticipation of the launch of ETDs by organising this training and inviting some of the finest subject matter experts from Europe, South Africa and the United States where the concept of derivatives has stood the test of time.