April 26, 2022 11:38 AM
A futures contract is a standardised legal agreement to buy or sell a particular commodity asset, or security at a predetermined price at a specified time in the future.exchange-traded derivatives Speaking during an interview on NTA, Jude Chiemeka, divisional head, capital markets at the NGX, said the introduction is in line with the exchange’s readiness to provide investors with a deep and liquid market to hedge their portfolios.
According to NGX, the new development is consistent with the exchange’s commitment to developing the Nigerian capital market by providing a market that thrives on innovation and responds to the needs of stakeholders in accessing and using capital.Chiemeka also noted that these contracts were attractive to investors because the contracts were listed on the exchange trading system which was deployed by NASDAQ, and there are rules governing order priority.
According to him, the provision for a standardised central counterparty system , NG Clearing Limited, for effective risk management would further boost investor confidence in the market and the CCP would clear the contracts and ensure parties fulfil their obligations.He added that the NGX derivatives market would not only allow investors to protect their positions but would also allow them to benefit from various opportunities.