Nigerian Exchange Limited (NGX) recently organized a comprehensive workshop, aiming to educate market stakeholders about the newly launched Single Stock Futures (SSFs) product.
The event sought to bridge the information gap surrounding the asset class while emphasizing NGX’s commitment to enhancing the depth of the Nigerian capital market.
SSFs, a form of derivatives instruments, provide traders with the opportunity to buy or sell a single stock at a predetermined future date and price. The workshop, sponsored by RMB Capital, PAC Securities, and APT Securities, took place on Tuesday, 24 October 2023.
During the event, Jude Chiemeka, the Executive Director of Capital Markets at NGX, stressed that approximately 90% of the 500 largest global companies across 26 countries strategically utilize derivatives to manage risks. He highlighted the significance of derivatives in mitigating risk and fostering the growth of resilient and liquid capital markets, ultimately contributing to economic expansion.
Chiemeka remarked, “The global derivatives market is poised for significant growth, projected to reach $39.17 billion by 2027, up from $21.98 billion in 2020, with a compound annual growth rate (CAGR) of 8.6%. This remarkable growth is underpinned by product and technology innovations driven by exchanges, intermediary firms, and related service providers worldwide.”
NG Clearing’s Managing Director and CEO, Farooq Oreagba, also addressed the workshop, shedding light on the role of Central Counterparties (CCPs) in derivative transactions. Oreagba emphasized that CCPs play a vital role in ensuring that all parties fulfill their trade obligations, monitoring margins and collateral, thereby safeguarding against potential losses.
The fireside session featured insights from derivatives experts across East and South Africa, with Justus Ogalo, a derivatives manager from the Nairobi Securities Exchange, and Kgabo Molabe, a Specialist Structured Products representative from the Johannesburg Stock Exchange, discussing liquidity challenges faced in their respective regions.
In the Nigerian financial market, the introduction of derivatives is anticipated to bring numerous advantages in deepening the market. SEC’s Director of Registration, Exchanges, Market Infrastructure, and Innovation, Abdulkadir Abbas, emphasized the regulator’s efforts in collaborating with various stakeholders and enhancing capacity in this domain.
Other key speakers at the event included Mr. Gabriel Olumide Odediran, CEO of Page Investment Managers; Mr. Aigbovbioise Aig-Imoukhuede, President of the Fund Managers Association of Nigeria (FMAN); Mr. Biodun Adebimpe, President of the Association of Asset Custodians of Nigeria (AACN); and Mr. Oguche Agudah, CEO of the Pension Funds Operators Association of Nigeria (PENOPS).
