Expert cautions NSE, operators on introduction of derivatives

By Peter Egwuatu

OPERATORS and  regulators in the Nigerian capital market have been advised to be cautious about the proposed introduction of derivatives market.

Former Chairman of the United States Commodities Futures Trading Commission (US CFTC) Mr. James Stone, gave the advice to market operators and participants while speaking at a forum organised by the Nigerian Stock Exchange (NSE) in collaboration with Coronation Merchant Bank Group in Lagos.

The floor of Stock exchange

Speaking on: ‘Pluses and Pitfalls of Derivatives Trading,’ Stone noted that it is better to begin with the simple form of derivatives and improve on them.

According to him, since there are already Exchange Traded Funds (ETFs) in Nigeria, it is better to begin with exchange traded derivatives.

The Chief Executive Officer of NSE, Mr. Oscar Onyema disclosed that the exchange has been planning to launch exchange traded derivatives in the market, saying that the experience shared by Stone will assist in that direction.

He said having Mr. Stone, a fellow of the American Society of Arts and Sciences, who was appointed by President Jimmy Carter as Chairman of the US CFTC, was an amazing opportunity because of the quality of engagement and insight gained from the interaction.

“The Exchange is committed to building capacity and enhancing the expertise of operators and other associated parties towards collective efficiency. The lecture on ‘Pluses and Pitfalls of Derivatives provided enriching perspectives and strengthen the capacity of capital market operators, who create value for investors through their operations on the floor of the NSE,” Onyema said.

The NSE DG commended Coronation Merchant Bank for sponsoring the forum, saying this partnership bodes well with their quest to introduce exchange traded derivatives into the Nigerian capital market. “Last year, we leveraged our X-Academy platform to conduct two tranches of training on the legal and risk aspects of derivatives and central counter-party clearing,” he said.

In his speech, the Managing Director, of Coronation Merchant Bank, Mr. Abubakar Jimoh said: “We are excited about our collaboration with the NSE on this noteworthy initiative, which will have positive effects on capital market operations in Nigeria.”

According to him, as a wholesale financial institution focused on transforming the face of merchant banking in Africa, Coronation Merchant Bank is not only open to innovative collaborations that will bring development to the African financial landscape, but will serve as a catalyst for revitalizing capital market operations across the continent.


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