The NSE launching Exchange Traded Derivatives is a big deal                     


As part of measures to enhance liquidity and participation on the Nigerian Stock Exchange (NSE), it has decided to introduce Exchange Traded Derivatives (ETDs) . First Vice President of the NSE, Abimbola Ogunbanjo, disclosed this at a training seminar held in Lagos recently.

Exchange traded derivatives are simply derivatives traded on the floor of a stock exchange.  A derivative is simply a contract between two parties. The derivative’s value is dependent upon the underlying asset.  Derivatives are used to diversify a portfolio, manage risk and take advantage of market movements.

Unlike regular derivatives, the exchange serves as a middle man in ETD transactions. This reduces the chances of a default, as the contracts will be formal and binding.  The introduction of this asset has numerous positive benefits for the exchange and the economy as a whole. Multinational corporations that hitherto shied away from derivative transactions will now participate. Many of these companies made billions of Naira in FX losses due to failure to hedge foreign exchange obligations.

Introduction of ETDs will enhance liquidity on the stock exchange. Companies and individuals that had shied away from these transactions will trade them actively. The NSE, and stockbrokers will have enhanced income from ETF trading activities. International investors that had shied away from the market due to its shallow nature, will be active participants in the ETD market.  ETD transactions tend to make use of leverage and occur in large volumes, so banks also benefit from ETD transactions. The underlying assets on which the derivative trades are based on will also have enhanced liquidity.

 

What others say about : The NSE launching Exchange Traded Derivatives is a big deal                     ..


Anodebenze

I thought they are doing it,we hope that the nse will provides more detail.once they do it.THEY WILL LIST FOREX TRADE FUNDS AND COMPANIES,for most young Nigerians,it means the nse management is bringing a massive reform in nse to broaden and deepens the Nigerian stock marke OR NOT once they provides us the detail,we will put our teeth on the balls on the management of nse,we will not let this grip on their ball until they do it,up till next year.this is how it is going to happen.maybe the office of the vice president will set in and his economic team as the vice-president did visited the floor of the nse last year
This is a nigerian initiative.THE NIGERIAN STOCK MARKET CAN SERVES AS A VENUE OF RAISING CAPITALS AND FUNDS FOR MOST COMAPANIES AND MAKING ME RICH TOO.they can set up a taskforce headed by somebody from their management in consulting and bringing together audtors accountants,security dealers.stockbrokers,bankers law document to be drafed by lawyers in a standardizes and harmonizing fees approved by the nse for everybody(,like a helicopter pouring money into the economy like what the americans are doing with their economy having deficit every where,deficit in govt bond,deficit mucipal bond,deficit in balance of trade,deficit in annual national budget,just kidding.
Once the nse withdraws this taskforce action the market will start to clean up it’self,the weak will die or takenover by the strong one.some will loses money,but the nse can set in or suspend their shares from trading,the strategic aim is to get a lot of companies listed on the stock market at least 5500 companies this year nothing is impossible in nigeria,the securitieS commission do not HAVE TO DEREGISTER SOME STOCKBROKERS AND SECURITIES DEALER AS THEY WILL HAVE JOB.WHICH THEY DID THIS WEEK

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