Liftoff of West Africa’s primary Exchange Traded Derivatives on the Nigerian Stock Exchange is near heeding the Registration of NG Clearing by the Securities and Exchange Commission
By Abdul Rahman Bangura–
NEW AFRICA BUSINESS NEWS (NABN) Freetown, Sierra Leone– The blastoff of West Africa’s prime Exchange Traded Derivatives (ETDs) on The Nigerian Stock Exchange (NSE) is ready pursuing the registration of NG Clearing by the Securities and Exchange Commission (SEC) as an upmarket Central Counterparty Clearing House (CCP). The approval-in-principle will enable The Exchange to establish ETDs aided by NG Clearing in the risk management process.
Establish by key players in the Nigerian financial industry comprising the NSE, Central Securities Clearing System (CSCS) and top-tiered banks, NG Clearing will take advantage of a key role in the financial market ecosystem, by steering the safety and stability of Africa’s global marketplace through fruitful and immediate settlement of derivative trades. Related with a partner exchange of the World Federation of Exchanges (WFE), capital market players can foresee NG Clearing to align with the highest norms of global acceptable trades in providing clearing and settlement services.
Oscar N. Onyema who is doubling as – the Chief Executive Officer NSE and Chairman, NG Clearing, expressed, “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. We intend to deliver an unparalleled CCP experience for the African financial markets.”
Thus, the curtain-raiser of ETDs on the NSE will exacerbate Africa’s status in the global financial markets, as well as enable liquidity and help mitigate against price, duration and other financial risks that may ensue from intricate financial transactional activities. The Exchange, the leading securities Exchange in West Africa with transnational memberships in the likings of WFE, IOSCO, ISG, will induct the first set of equity-linked products such as index-futures or single-stock futures/options that convene accepted financial structuring standards enabling global & domestics investors and investment managers to suitably pussyfoot against downside risk.
In establishing the groundwork to assemble an organized derivatives market, NSE has operated with SEC and the Central Bank of Nigeria (CBN) to ascertain the optimal regulatory and legal framework for derivatives in the Nigerian capital market. In upswing, NSE has partnered with international investment banks, such as JPMorgan Chase, to promote in-depth capacity building programme on the derivatives market. Leading up to the liftoff of ETDs, the Exchange will publish its early set of trading licenses in over twenty years as it oftentimes kisses and onboard trading/clearing members. The NSE will also proceed market-wide capacity building for undisputed participants, including the recently held virtual workshop with the theme, Adopting Derivatives during Stressed Market Conditions and the Legal and Regulatory Requirements of Derivatives Trading for Capital Market.
For New Africa Business News (NABN) Abdul Rahman Bangura Reports, Africa Correspondent
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