Nigeria to boost stock market with $39.17b derivatives

Authorities at the stock market plan to deepen trading in derivatives as the global derivatives market is expected to hit $39.17 billion by 2027.

Acting Chief Executive, Nigerian Exchange (NGX), Mr. Jude Chiemeka, said derivatives play a crucial role in global risk management, with over 90 per cent of leading companies using them.

As part of efforts to boost derivatives trading, NGX and NG Clearing Limited collaborated to expose market participants and investors to deeper understanding of the single stock futures product in the Exchange Traded Derivatives (ETDs) market with.

He noted that the NGX derivatives market is positioned to drive innovation and diversification in the financial sector, offering a transparent platform aligned with international standards.

According to him, the virtual webinar, themed ‘Understanding the Trading of Single Stock Futures’, serves as a beacon of enlightenment, illuminating the pathways to unlocking value in this dynamic asset class.

Speaking on the central counterparty’s role in managing the trading infrastructure, Chief Executive Officer, NG Clearing, Farooq Oreagba, emphasised the importance of research and analysis to investors before embarking on trading futures.

“Just as there is leverage on the upside, there is leverage on the downside. As regards market oversight and transparency, our operations department at NGCL is at alert and sees all market positions before market opening to ensure operators do not exceed their limits,” Oreagba said.

President, Chartered Institute of Stockbrokers, Mr Oluwole Adeosun said derivatives would deepen the Nigerian market.

“This is an exciting period for our market. As investors and players we should be familiar with the rules and regulations guarding the market and also update our knowledge on the derivatives market.

“CIS has over the years provided intellectual leadership in the conduct and practice of finance, securities and investment in Nigeria. The institute is prepared more than ever before to play this role of aiding capacity building for this market and the new product, single stock futures,” Adeosun said.

First Vice Chairman, Association of Securities Dealing Houses, Mr Seinde Adenagbe noted that it was pivotal for securities dealers to maintain trust to ensure the confidence of investors in the market.

“Derivatives are a contract that buyers and sellers must meet their obligations. This contributes to market integrity. Introducing more products like single stock futures is important to the depth of the market as we need to create another pool of investment for our investors,” Adenagbe said.