Nigerian Bourse to Start Central Clearing of Derivatives From Next Year

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Central counterparty to clear index, single stock futures

Bourse to establish fund for trade guarantee and settlements

The Nigerian Stock Exchange will start clearing and settlement of exchange-traded derivative products in the second quarter of next year as it seeks to deepen the financial market of Africa’s biggest crude producer.

The Lagos-based bourse has obtained approval in principle from the Securities and Exchange Commission to operate NG Clearing Ltd., a central counterparty clearing house, it said in an emailed response to questions on Tuesday. The company will settle trade and counterparty risks for products including “index futures, single stock futures, FX futures, fixed income and commodities futures,” it said.

The market regulator said last year it will register a central clearing house to take on credit risks between parties in derivatives trading and also to help clear and settle deals. The bourse is introducing futures trading to enable investors to hedge risks and boost investments in the market that’s gradually recovering from a slowdown triggered by the coronavirus pandemic and a slump in oil prices.

The 153-member stock exchange is also looking to set up a settlement guarantee fund that it expects to grow rapidly.

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