Popoola Highlights Benefits of Derivatives Market to Investors, Nigeria

By Aduragbemi Omiyale

The chief executive of the Nigerian Exchange (NGX) Limited, Mr Temi Popoola, has listed what Nigeria and investors stand to gain from the derivatives market.

Speaking at the sixth edition of the exchange’s Market Data Workshop held on Wednesday, November 3, 2021, the capital market expert said one of the benefits of financial derivatives is the deepening of the capital market, which will, in turn, boost the nation’s economy.

“The innovation of financial derivatives in Nigeria and trading them through the organized Exchange will play a pivotal role in contributing to economic development by making risk manageable, enabling price discovery and reducing transaction costs for both financial and non-financial firms.

“Their continued contribution to economic growth will depend on the markets becoming more transparent and liquid, enabling end-users to generate competitive returns while effectively hedging risk,” he stated.

Mr Popoola also highlighted the importance of leveraging market data in this regard stating that, “Through cutting-edge technology, NGX continues to promote a high level of market transparency by enabling easy access to quality real-time market data to all market participants including regulators.

“Market data such as transaction prices, bids/offers and other trading information becomes the bedrock for price discovery and investment strategies.

“Derivatives traded on exchanges disseminate price information that aids both private and public entities because exchanges make contract volume and price publicly available. Such transparency helps markets function more efficiently,” the NGX boss disclosed.

The conference featured presentations and panel discussions from Dr Izzy Nelken, founder, Super Computer Consulting Inc; Mr Uwa Agbonile, CEO of InfoWARE Limited; Joshua Uwedinisu, Head, Risk Management, Zenith Bank; Dr Mary Akinyemi, Senior Lecturer, Mathematics and Statistics, University of Lagos; Mr Ayokunle Adaraalegbe, Chief Operating Officer, NG Clearing Limited; Mr Folagbade Adeyemi, Head, Start Up Operations, CSCS Plc; and Mr Olufemi Balogun, Head, Market Services, NGX.

Business Post reports that this year’s event was held virtually in collaboration with Zenith Bank, Reliance Infosystems Limited, Infoware, MTN Nigeria, CSCS Plc, United Capital, NG Clearing, Cordros, Neulogic, Apel Asset Management and ARM.

With the theme How Market Data Powers Investment Strategies Using Derivatives Products, the workshop was designed to provide capital market stakeholders – particularly institutional investors, actuaries, portfolio managers – with insights into price, valuation and investment strategies using derivatives and fixed income products, as well as technical tools that can be applied to mitigate risk.