NG Clearing to Become CCP for Derivative Products


By Goddy Egene

NG Clearing Limited has secured approval-in-principle from the Securities and Exchange Commission to launch clearing and settlement of exchange traded derivative products, as Nigeria’s premier Central Counterparty Clearing House (CCP).

NG Clearing’s role as a CCP in Nigeria’s financial ecosystem is to ensure safety of the market by managing counterparty credit risk, which in turn, reduces systemic risk in the Nigerian capital market, by guaranteeing settlement of trades.

Speaking on the development, the Chairman, NG Clearing Limited, Mr. Oscar Onyema, said: “Our main role is to improve the safety of our financial market by delivering best-in-class post-trade services that manage counterparty credit risk and reduce systemic risk. To mitigate these credit risks in an efficient and robust manner, we will interpose ourselves as a guarantor to both parties in a transaction, thus ensuring the successful execution of derivatives and other trades from various trade points in Nigeria. We intend to deliver an unparalleled CCP experience for the Nigerian financial market.”

According to him, the company will optimise deployment of its resources to achieve long-term value creation for its stakeholders using a state-of-the-art risk management framework, which complies with global best practices for mitigating settlement risk.

“Its risk based additional collateral requirement will ensure that capital deployed by clearing members is always optimal. The company intends to deploy a competitive low-cost clearing fee regime for members. The company has sufficient financial resources, including settlement guarantee fund, to cover participants’ risk exposures. Members will have access to a wide range of financial reports that equip them with extensive knowledge and enable them make informed decisions,” he added.

Explaining further, the Managing Director, NG Clearing Limited, Mr. Tapas Das, said: “NG Clearing shall be playing a key role in the financial market ecosystem in the region, upholding stability and safety of the marketplace, through efficient and timely settlement of derivative trades. The aim is to strengthen the country’s investment environment through solutions that systematically reduce risks, enhance operating efficiency, and minimise costs for all market participants, thereby serving as a catalyst to national development.”

Meanwhile, the equities market maintained its positive trend as the Nigerian Stock Exchange (NSE) All-Share Index gained 0.39 per cent to close higher at 26,611.96, while market capitalisation added N54.4 billion to be at N13.9 trillion. Activity level increased as volume and value traded climbed 22.7 per cent and 12.4 per cent to 413.1 million shares units and N4.5b billion respectively.