NSE gets CMA nod to launch derivatives market

The Capital Markets Authority (CMA) has granted approval to Nairobi Securities Exchange (NSE) to launch and operate the Derivatives Exchange Market pursuant to the Capital Markets Act and the Capital Markets (Derivatives Markets) Regulations, 2015.

This 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 approval granted to the NSE to operationalise a Derivatives Market marks the achievement of a flagship project under the Economic Pillar of Kenya’s Vision 2030. The Derivatives Market will facilitate deeper and more liquid capital markets and position Kenya closer to becoming the Heart of Capital Markets Investment in Africa, as envisioned in the Capital Markets Master Plan,” noted CMA Chief Executive Paul Muthaura.

Initially, the Derivatives Market will offer investors Equity Single Stock Futures (SSF) and Equity Index Futures (EIF) and later introduce other financial and commodities derivatives.

Matthew Mukisu, Manager, Derivatives Unit, observed that a robust infrastructure has been set up to facilitate trading, risk management, clearing and settlement. Two banks, Stanbic Bank and the Co-operative Bank, have been approved by their primary regulator to provide clearing and settlement for the Derivatives Exchange Market.