NGX Configures X-Stream Platform to Trade Derivatives Products

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By Dipo Olowookere

In preparation for the commencement of the trading of derivatives products in the country, the Nigerian Exchange (NGX) Limited has configured its X-Stream platform.

This development was confirmed by the Divisional Head of Trading Business at NGX, Mr Jude Chiemeka, during an event with Pension Fund Administrators (PFAs) some days ago.

The X-Stream is a trading system of the exchange deployed by NASDAQ for the purpose of trading derivatives products.

The NGX has been making efforts to ensure the smooth trading of derivatives in the country and on June 28, 2021, the Securities and Exchange Commission (SEC) approved seven derivatives contracts for the platform.

These contracts are Access Bank Plc Stock Futures, Dangote Cement Plc Stock Futures, Guaranty Trust Bank Plc Stock Futures, MTN Nigeria Communications Plc Stock Futures, Zenith Bank Plc Stock Futures, NGX 30 Index Futures, and NGX Pension Index Futures.

To enhance the knowledge of key players in the market, especially the PFAs, who are the first line of contact for investors, the stock exchange held the virtual session with them.

The event was in collaboration with NG Clearing hosted and, in his presentation, Mr Chiemeka said, “In line with our commitment to deepen the Nigerian capital market, NGX will introduce derivatives as a new asset class to the benefit of stakeholders, including PFAs.”

“We are confident that derivatives will provide a greater pool of liquidity and the participation of PFAs in NGX derivatives market will not only allow PFAs to protect their positions but also benefit from various opportunities.

“That said, being the first line of contact for investors in the capital market, NGX is focused on educating market participants through workshops, webinars and conferences which will continue pre and post-product launch,” he added.

Mr Chiemeka also highlighted three main elements which are critical to the success of any derivatives market and expounded on the efforts of NGX in ensuring these are in place.

The areas are market efficiency and integrity, financial safety and integrity, and customer protection (fair treatment of customers).

“Ahead of the launch of derivatives, The Exchange trading system, X-Stream – which was deployed by NASDAQ – has been configured to trade derivatives products and there are rules governing order priority.

“Also, The Exchange has a robust market surveillance system – SMART – to monitor the market on a regular basis for any potentially manipulative behaviour of market participants,” he further stated.

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