Asset diversification: NSE committed to derivatives launch in 2019 – Onyema

In a bid to encourage portfolio diversification, the Nigerian Stock Exchange (NSE) on Monday said it would launch a platform for tradiding of derivatives in 2019.

Mr Oscar Onyema, Chief Executive Officer, NSE, stated this at the 2018 market recap/2019 outlook in Lagos.

Our correspondent reports that derivative is a financial instrument whose value is based on the value of another asset, and can be used to hedge exposure or speculate on commodities, equities, currencies and even interest rates.

Onyema said the exchange had completed technological enhancements for the launch of derivatives product.

“Our technology infrastructure has been enhanced to support the trading launch. The rulebook has been created and is currently going through the approval process alongside on-boarding of dealing members,” Onyema said.

He said the launch of derivatives was not within the exchange alone, noting that, it was working with the entire ecosystem to make it a reality.

Reviewing the performance of the market in 2018, Onyema noted that “NSE equity market started the year on a high, with the All Share Index (ASI) reaching a 10-year peak of 45,092.83 in January.

“This was largely driven by the positive performance of the ASI in 2017, which emerged the best in Africa.

“As we approached the second quarter, political risks, oil price volatility and rising global yields resulted in bearish sentiments that saw the ASI and equity market capitalisation fall by 17.81per cent and 13.87 per cent to close at 31,430.50 and N11.73 trillion respectively,” he said.

Onyema said listing activity remained relatively low during the year with one listing and four delistings, while equity turnover remained relatively stable, marginally declining by 5.45 per cent to N1.20 trillion.

He said the turnover velocity inched up by 0.91 percentage points to 10.25 per cent, while the volumes traded in the period increased by 0.96 per cent to 101.43 billion shares.

Onyema said the financial services sector was the highest traded in volume and value.