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Kenya's NSE secures regulatory approval for derivatives market

Kenya's NSE secures regulatory approval for derivatives market
Source: Reuters
Date: 29-05-2019 Time: 05:05:15:pm
A worker checks an electronic board displaying market data during a trading session at the Nairobi Securities Exchange in Nairobi, Kenya September 6, 2018. REUTERS/Thomas Mukoya/File Photo

Kenya’s Nairobi Securities Exchange has received regulatory approval to launch a derivatives market, the Capital Markets Authority said on Wednesday.

The NSE, the main entry point for foreigners seeking to invest in East Africa, has been grappling with the challenges of setting up a derivatives market for years.

“This (approval) follows the successful completion of a six-month Derivatives Pilot Test Phase conducted between July and December 2018, and resolution of key issues that emanated from the test phase,” the CMA said in a statement.

Investors will initially be offered single stock futures and equity index futures, the CMA said, before other financial and commodity derivatives are introduced.

Exchange executives have said derivatives trading would boost liquidity on the bourse, which has 65 listed firms of which telecoms and banks are some of the most heavily traded.

The NSE will be the second exchange in Sub-Saharan Africa after Johannesburg to launch trading in derivatives.

Kenya’s Stanbic Bank, part of Stanbic Holdings and Co-operative Bank of Kenya, have been licensed by the central bank to handle clearing and settlement for the derivatives exchange, the CMA said.