Economy
BDC Operators Want Inclusion in Remittances Market
By Adedapo Adesanya
The Association of the Bureau De Change Operators (ABCON) has called on the Central Bank of Nigeria (CBN) to open up the remittances market to allow more players into the exclusive club.
The group, in its Quarterly Economic Review report for the second quarter of the year, said doing this will increase access points, drive down the cost of remittances service for customers, and also drive the country’s financial inclusion goals.
The association noted that, “Opening up the remittance market generates competition among remittance payment operators.
“This is an important factor for the development of the market because it helps to keep the costs of these services low for consumers, helps increase access points, promote product innovation, and can ultimately contribute to greater financial inclusion.
“Lack of necessary inclusion makes a good volume of the flow into Nigeria’s system to go into the unofficial market sector.”
While noting that the entrance of BDCs to the remittances market is imminent, ABCON challenged BDC operators to train and equip their outfits so that they can render competitive and effective remittance services.
ABCON also called on the apex bank to look beyond the portfolio inflows, which adds to the country’s public debt and instead explore better and less stressful avenues for foreign exchange.
“The CBN should look beyond the portfolio inflows, which adds to the public debt and seek stable and germane sources of foreign exchange.
“The present unification of the exchange rate should also be supported by new techniques and redefined trade policies particularly to mismatch import duties where duties on raw materials are sometimes higher than imported finished goods,” it said.
Lauding the recent decision to suspend the proposed hike in electricity tariff, ABCON urged that the same decision should be extended to proposed increases in taxation and tariffs, stressing that shortfalls in the budget as a result of the suspension should be covered with COVID-19 related donations.
“Most importantly, government should, as a major policy during, this COVID-19 recovery period suspend any imposition or increase in taxation instead such shortfalls that might have emerged between national budget adjustments and expenditures should be covered by various financial support to COVID-19 from foreign and local contributors.
“In line with this observation, all current increases in tariffs and taxes could be deferred until when the economy recovers from the effects of the pandemic.”
ABCON also called for actions to minimize disruptions in the food chain, noting that this was a time to look at an impending food crisis, adding that saving lives should be the key priority now.
“The lockdown and the consequent effects have been in Nigeria for about four months now in various states of the federation.
“One of the evident consequences of COVID-19 crisis is the potential to trigger a food security crisis in Nigeria, with agricultural production potentially contracting between 2.6 per cent in an optimistic scenario and up to seven per cent if there are trade blockages according to a World Bank survey.
“Thus, there should be more emphasis on saving lives and protecting livelihoods through strengthening health systems and taking quick actions to minimize disruptions in food supply chains.
“There should also be a faster implementation of social protection programs, including cash transfers, food distribution and fee waivers, to support citizens, especially those working in the informal sector,” the association stated.
By Adedapo Adesanya
Dangote Petroleum Refinery and Petrochemicals has reviewed its ex-gantry loading cost of petrol downward by 1.7 per cent to N865 per litre.
According to a report by Channels Television, an official of the refinery confirmed the price reduction from N880 to N865 per litre.
The $20 billion refinery has also informed its marketers and customers of the slash on Thursday.
The price reduction comes as the oil prices fell in the international market due to escalating trade war between the US and China.
President Donald Trump paused recent tariffs imposed on all countries exporting goods to the US, except on China, which it has accused of unfair practices.
The continued beef has stoked concerns that a global recession may happen and will dampen demand for crude.
The slash in the ex-depot price also comes as the federal government said its Naira-for-crude initiative remains in effect and will continue despite its recent suspension by the Nigerian National Petroleum Company (NNPC) Limited after a meeting with stakeholders including the Dangote Refinery team.
According to a statement from the Ministry of Finance, the scheme is still in effect and will continue immediately, overruling the decision of the NNPC Limited under its immediate past chief executive, Mr Mele Kyari, which tenured the programme.
It affirmed that the crude and refined product sales in Naira initiative is not a temporary or time-bound intervention, but a key policy directive designed to support sustainable local refining, bolster energy security, and reduce reliance on foreign exchange in the domestic petroleum market.
In March, the NNPC Limited halted its Naira-for-crude oil agreement with the company and other local refiners.
The state-owned oil agency said it would stop selling crude oil to Dangote Refinery in Naira from the end of this month, claiming its deals was for six months, from October 2024 to March 2025.
This came after the refinery, owned by billionaire Aliko Dangote, triggered a price war with the NNPC, crashing the price of premium motor spirit (PMS) to N825 per litre from its depots.
The NNPC operates in the downstream sector of the petroleum industry but the Dangote Refinery only has partners like MRS Oil, Ardova Plc, and Heyden, which sell its products to customers at retail prices.
Introduction
Trading in futures and options (F&O) has become a popular way to diversify investments and hedge risks in the financial markets. With the right knowledge and strategy, anyone can start trading and leverage F&O to maximize returns. This guide will walk you through the fundamentals of business with futures and options, how to start trading, and essential strategies for success.
Understanding Futures and Options
What Are Futures?
A futures contract is a financial agreement to buy or sell an asset (stocks, commodities, or indices) at a predetermined price on a future date and to start future and option trading futures and options. Futures are standardized contracts traded on exchanges like NSE (National Stock Exchange) and BSE (Bombay Stock Exchange).
Key Features of Futures Contracts:
- Obligatory Execution: Buyers and sellers must fulfill the contract on the expiry date.
- Margin Trading: Traders only pay a fraction of the total contract value as a margin.
- Leverage: Investors can take large positions with limited capital.
What Are Options?
Options give traders the right (but not the obligation) to buy or sell an asset at a specific price before or on the contract expiry date.
Types of Options:
- Call Options – Gives the right to buy an asset at a fixed price.
- Put Options – Gives the right to sell an asset at a fixed price.
Why Trade Futures and Options?
- Hedging Against Market Risks: Investors use F&O to hedge risks in volatile markets.
- High Leverage: Traders can control large positions with minimal capital.
- Profit in Bull and Bear Markets: Options trading allows earning from both rising and falling markets.
- Portfolio Diversification: F&O trading provides exposure to various asset classes.
How to Start Trading in Futures and Options
1. Open a Trading and Demat Account
To trade in F&O and how to start trading you need a Demat and trading account with a registered stockbroker.
Steps to Open an Account:
- Choose a SEBI-registered stockbroker (e.g., Zerodha, Upstox, Angel Broking).
- Submit KYC documents (PAN, Aadhaar, bank details, income proof).
- Complete account verification and receive login credentials.
2. Understand Market Fundamentals
Before trading, gain knowledge about:
- Stock Market Trends: Track nifty 50, sensex today, and India vix to understand volatility.
- Fundamental and Technical Analysis: Learn to analyze financial reports and price charts.
- Option Greeks (Delta, Gamma, Theta, Vega): These help in assessing option price movements.
3. Learn About Margin Requirements
Trading in F&O requires margin money, which varies based on contract size and market conditions. Stockbrokers provide margin calculators to help traders plan their positions.
4. Choose the Right Trading Strategy
Popular Futures Trading Strategies:
- Trend Following Strategy – Buy futures in an uptrend, sell in a downtrend.
- Spread Trading – Buy and sell futures contracts simultaneously to minimize risk.
- Scalping – Profit from small price movements by making multiple trades.
Popular Options Trading Strategies:
- Covered Call Strategy – Holding a stock while selling call options to earn premiums.
- Straddle Strategy – Buying both a call and put option to profit from high volatility.
- Iron Condor Strategy – Combining multiple options contracts to limit risk and enhance returns.
5. Start Trading with a Demo Account
Most stockbrokers provide paper trading accounts where beginners can practice trading without real money. This helps in understanding price movements, placing orders, and managing risk.
6. Monitor and Manage Risks
- Stop-Loss Orders: Protect against significant losses by setting stop-loss levels.
- Position Sizing: Avoid investing all capital in a single trade.
- News & Events: Track financial news, RBI policies, and corporate earnings reports.
Essential Tips for Successful F&O Trading
- Start Small: Begin with a few contracts and increase exposure gradually.
- Stay Updated: Follow market news, economic indicators, and stock trends.
- Avoid Overtrading: Excessive trading can lead to high brokerage fees and losses.
- Maintain a Trading Journal: Keep records of trades to analyze mistakes and improve strategies.
- Use Hedging Techniques: Reduce risk by using protective puts and call options.
Conclusion
Trading in futures and options is a powerful way to maximize investment opportunities and manage risks. By understanding market trends, choosing the right strategies, and practicing risk management, traders can build a profitable trading career. If you’re new to F&O trading, start with a Demat account, practice with demo trades, and gradually scale up as you gain confidence.
With the right approach, trading in futures and options can be a lucrative business venture and a strong financial tool for long-term success.
By Adedapo Adesanya
For the third consecutive trading session, the NASD Over-the-Counter (OTC) Securities Exchange ended in red territory, losing 0.10 per cent on Wednesday, April 9.
The market capitalisation lost N1.88 billion to close at N1.892 trillion compared with the preceding day’s N1.894 trillion and the NASD Unlisted Security Index (NSI) went down by 3.24 to settle at 3,277.39 points, in contrast to Tuesday’s 3,280.63 points.
The platform recorded two price losers yesterday, with Afriland Properties Plc losing 62 Kobo to close at N17.80 per share compared with the previous day’s N18.42 per share and Geo-Fluids Plc shedding 24 Kobo to end at N2.22 per unit versus Tuesday’s N2.46 per unit.
The volume of securities bought and sold by the market participants was down by 28.4 per cent to 185,449 units from the 259,092 units transacted in the previous trading day, the value of shares recorded slid by 74.8 per cent to N2.6 million from N10.5 million and the number of deals fell by 35.3 per cent to 11 deals from 17 deals previously recorded.
The most active stock by volume on a year-to-date basis remained Impresit Bakolori Plc with a turnover of 533.9 million units worth N520.9 million, followed by Industrial and General Insurance (IGI) Plc with 71.2 million units valued at N24.2 million, and Geo Fluids Plc with 44.5 million units sold for N90.0 million.
Also, the most active stock by value on a year-to-date basis was still FrieslandCampina Wamco Nigeria Plc with the sale of 14.4 million units valued at N557.7 million, trailed by Impresit Bakolori Plc with 533.9 million units worth N520.9 million, and Afriland Properties Plc with 17.8 million units valued at N365.0 million.
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