By Aduragbemi Omiyale
NG Clearing Limited, a company incorporated on May 24, 2016, to facilitate derivatives trading in the Nigerian capital market, has been given the licence to operate as a central counterparty (CCP).
The authorisation was given by the Securities and Exchange Commission (SEC), the apex regulatory agency in the Nigerian capital market and this licence became effective Monday, June 7, 2021.
With the registration to perform the function of a CCP, NG Clearing becomes the first organisation to carry out this duty in the country. It means the firm has the authority to clear and settle exchange-traded derivative products.
The Chairman of NG Clearing, Mr Oscar Onyema, expressed delight over this development, noting that it will improve the soundness and safety of the Nigerian financial market.
He said the company will deliver best-in-class post-trade services that manage counterparty credit risk and reduce systemic risk by interposing itself as a guarantor to both parties in a transaction, thus ensuring the successful execution of derivatives and other trades from various trade points in Nigeria.
“NG Clearing will deliver an unparalleled CCP experience for the Nigerian financial and capital markets and will optimise the deployment of its resources to achieve long-term value creation for its stakeholders using a state-of-the-art risk management framework, which complies with global best practices for mitigating settlement risk,” he said.
On his part, the Managing Director of NG Clearing, Mr Tapas Das said the company has sufficient financial resources, including a settlement guarantee fund to cover participants’ risk exposures.
He noted that members will have access to a wide range of financial reports that equip them with extensive knowledge and enable them to make informed decisions, as well as access to NG Clearing’s bespoke clearing and settlement software application which will support the clearing and settlement of derivative instruments across various asset classes i.e., futures and options contracts on indices, equity shares, commodities, currency, rates etc.
“NG Clearing shall be playing a key role in the financial market ecosystem in the region, upholding stability and safety of the marketplace, through an efficient and timely settlement of derivative trades.
“The aim is to strengthen the country’s investment environment through solutions that systematically reduce risks, enhance operating efficiency, and minimize costs for all market participants, thereby serving as a catalyst to national development,” he stated.
NG Clearing is promoted by the Nigerian Exchange Group Plc and Central Securities Clearing System (CSCS) Plc along with key stakeholders, including Nigeria Sovereign Investment Authority (NSIA), Access Bank Plc, Consonance Kuramo Special Opportunities Fund I, Coronation Merchant Bank Limited, Greenwich Merchant Bank Limited, Union Bank of Nigeria Plc, United Bank for Africa Plc (UBA) and Association of Securities Dealing Houses of Nigeria (ASHON).
