Kenya: Derivatives Market to Position Kenya As a Leading Financial Services Hub

Kenya Jul 11 – The Nairobi Securities Exchange (NSE) launched the NEXT Derivatives Market, Thursday making it the second African Exchange to launch a Derivatives Market.

The launch follows a successful six months pilot phase conducted to test the functionality of end to end transactions of futures contracts in a live environment.

Following the launch, the NSE will now offer Index Futures and Single Stock Futures on selected indices and stocks respectively.

The Exchange will initially offer index futures contracts on the NSE 25 Share Index and Single Stock Futures on Safaricom Plc, Kenya Commercial Bank Group Plc, Equity Group Holdings Plc, East African Breweries Ltd, and British American Tobacco Plc.

Futures contracts listed on the NSE will have quarterly expiry dates; this will be the third Thursday of March, June, September and December of every year. All NEXT futures contracts will be initially cash settled.

The launch of the Derivatives Market is in line with NSE’s 2015-2019 strategy which seeks to diversify investments products and to offer investors with a wide array of financial instruments for short and long term investments’ needs.

Geoffrey Odundo, Chief Executive NSE noted that, "The newly launched NEXT Derivatives Market will enhance investors portfolio performance by availing risk management tools in the wake of increasing asset price volatility in both domestic and international markets."

Speaking during the launch ceremony, Sam Kimani, Chairman, NSE noted that, "A globally competitive Derivatives Market is an acknowledgement of NSE’s commitment and ability to meet its strategic priorities as well as complement its existing product

offering and create a diversified market for local and international investors."

Speaking during the launch, Nelson Gaichuhie, Cabinet Administrative Secretary, National Treasury and Planning said, "The launch of the NSE NEXT Derivatives Market is a momentous achievement towards the attainment of the Financial Services Sector (FSS) aspiration of, creating a vibrant and globally competitive financial sector that will promote high level of savings to finance Kenya’s overall investments needs, as envisaged in the Vision 2030 blueprint".

"As Government, we will continue spearheading affirmative action that will position Kenya’s Capital Market as a key capital provider for Government’s development initiatives as well as well as a market of choice for domestic, regional andinternational investors and issuers," he added.The NEXT Derivatives Market will provide new opportunities to investors enabling them to better diversify their portfolios, manage risk and deploy capital more efficiently. Futures contracts provide investors with risk management tools in the wake of unexpected […]

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