SEC approves NGX derivative contracts with MTN, Dangote Cement

The Nigerian Exchange Limited (NGX) says it has received approval for seven derivative contracts from the Securities and Exchange Commission (SEC).

In finance, a derivative is a contract between two or more parties whose value is based on an agreed-upon underlying financial asset or group of assets.

According to a statement issued by the exchange on Friday, the SEC gave its approval on Monday, June 28.

The approved contracts are Access Bank Plc stock futures, Dangote Cement Plc stock futures, Guaranty Trust Bank Plc stock futures, MTN Nigeria Communications Plc stock futures, Zenith Bank Plc stock futures, NGX 30 index futures, and NGX Pension index futures.

The development follows the successful registration of NG Clearing, Nigeria’s first counterparty clearinghouse, by SEC, effective June 7.

The NGX noted that with these approvals, it is inching closer to launch West Africa’s first exchange-traded derivatives (ETD), supported by NG Clearing in the risk management process.

Ahead of the launch of derivatives, Temi Popoola, chief executive officer, NGX, said: “The launch of the derivatives market aligns with our commitment to building a market that thrives on innovation and responds to the needs of stakeholders in accessing and using capital.”

“We are, therefore, excited about the prospects of deepening Africa’s position in the global financial markets through ETDs, as well as enhancing liquidity and mitigating against price, duration, and other financial risks that may arise from sophisticated financial transactional activities.”