Nigeria Bourse Pursues Course Towards Derivatives Trading
- The bourse is particularly focused on plans to trade naira futures, which would allow investors to better manage risk.
The Nigerian Stock Exchange aims to start trading derivatives such as futures and options in interest rates, currency and equity indexes by 2016, according to Bloomberg. Currently, its trading offers are limited to shares, bonds and exchange-traded funds.
The bourse is particularly focused on plans to trade naira futures, which would allow investors to better manage risk, hedging around the Nigerian currency’s volatility.
“It would be awesome if we had a naira-dollar contract that we could trade on the exchange,” Chief Executive Officer, Oscar Onyema said in London on Monday, according to Bloomberg. “Futures and options are asset classes that we think would be very beneficial to foreign investors.”
Indeed, the plummeting prices of Brent crude oil, which accounts for up to 90% of the West African nation’s exports, has placed pressure on the currency, which has dropped by 18% against the dollar in the past year.
As such, the Nigerian Central Bank imposed restrictions on the naira in late 2014 to curb the weakening currency in Africa's biggest economy. This has prompted investors to call for a loosening of controls. Only last week the Central Bank called a meeting with chief executives and treasurers of commercial lenders to discuss issues surrounding its policy on the foreign exchange market.
Indeed, London-based analyst for Africa at Standard Chartered Bank, Samir Gadio said in a chat with THISDAY: “International investors are eager to come back to the Nigerian debt market, but the main constraint remains the exchange rate level. The overwhelming majority of portfolio investors would like to see a higher and more sustainable exchange rate equilibrium as well as a move back to a price-driven Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this TermTrading Platform Trading Platform In the FX space, a currency trading platform is a software provided by brokers to their respective client base, garnering access as traders in the broader market. Most commonly, this reflects an online interface or mobile app, complete with tools for order processing.Every broker needs one or more trading platforms to accommodate the needs of different clients. Being the backbone of the company’s offering, a trading platform provides clients with quotes, a selection of instruments to trade, real In the FX space, a currency trading platform is a software provided by brokers to their respective client base, garnering access as traders in the broader market. Most commonly, this reflects an online interface or mobile app, complete with tools for order processing.Every broker needs one or more trading platforms to accommodate the needs of different clients. Being the backbone of the company’s offering, a trading platform provides clients with quotes, a selection of instruments to trade, real Read this Term."
At the same time, the stock exchange is also considering changes to its ownership in a bid to improve governance and raise funds for expansion, which includes plans to set up a clearing house.
The Nigerian Stock Exchange aims to start trading derivatives such as futures and options in interest rates, currency and equity indexes by 2016, according to Bloomberg. Currently, its trading offers are limited to shares, bonds and exchange-traded funds.
The bourse is particularly focused on plans to trade naira futures, which would allow investors to better manage risk, hedging around the Nigerian currency’s volatility.
“It would be awesome if we had a naira-dollar contract that we could trade on the exchange,” Chief Executive Officer, Oscar Onyema said in London on Monday, according to Bloomberg. “Futures and options are asset classes that we think would be very beneficial to foreign investors.”
Indeed, the plummeting prices of Brent crude oil, which accounts for up to 90% of the West African nation’s exports, has placed pressure on the currency, which has dropped by 18% against the dollar in the past year.
As such, the Nigerian Central Bank imposed restrictions on the naira in late 2014 to curb the weakening currency in Africa's biggest economy. This has prompted investors to call for a loosening of controls. Only last week the Central Bank called a meeting with chief executives and treasurers of commercial lenders to discuss issues surrounding its policy on the foreign exchange market.
Indeed, London-based analyst for Africa at Standard Chartered Bank, Samir Gadio said in a chat with THISDAY: “International investors are eager to come back to the Nigerian debt market, but the main constraint remains the exchange rate level. The overwhelming majority of portfolio investors would like to see a higher and more sustainable exchange rate equilibrium as well as a move back to a price-driven Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this TermTrading Platform Trading Platform In the FX space, a currency trading platform is a software provided by brokers to their respective client base, garnering access as traders in the broader market. Most commonly, this reflects an online interface or mobile app, complete with tools for order processing.Every broker needs one or more trading platforms to accommodate the needs of different clients. Being the backbone of the company’s offering, a trading platform provides clients with quotes, a selection of instruments to trade, real In the FX space, a currency trading platform is a software provided by brokers to their respective client base, garnering access as traders in the broader market. Most commonly, this reflects an online interface or mobile app, complete with tools for order processing.Every broker needs one or more trading platforms to accommodate the needs of different clients. Being the backbone of the company’s offering, a trading platform provides clients with quotes, a selection of instruments to trade, real Read this Term."
At the same time, the stock exchange is also considering changes to its ownership in a bid to improve governance and raise funds for expansion, which includes plans to set up a clearing house.