Nairobi securities exchange reiterates commitment to launch derivatives product

Nairobi, Kenya: The Nairobi Securities Exchange (NSE) has reiterated its commitment to introduce a derivatives market by the end of 2016. 

According to Samuel Kimani the NSE Board Chairman, the bourse is finalising plans for launch and which will happen ‘Very Soon’. 

“It is our intention to grow into a globally competitive exchange. As such we have been working on a range of new products, key of which is the launch of a derivatives market, the M-Akiba and exchange traded funds”, He said. 

Kimani was speaking soon after opening the two-day Commodity Trading and Risk Management seminar at the Windsor Golf Hotel and Country Club in Nairobi. 

The NSE is expected to launch two futures contracts – a currency contract, and a composite index contract. 

Critiques have in the past lamented at the myriad of challenges that have slowed efforts to introduce commodity and derivatives trading in the Country. These include inadequate interest from Government, poor market infrastructure, high technology costs as well as the complex production and market structures needed for sustainability in Kenya. 

“Attempts to create an open outcry exchange in the 1990s failed. It survives to date as a market information service”, said Matanda Wabuyele, Chief Executive of the Kenya National Chamber of Commerce and Industry who also spoke at the event. 

Calling for a more effective Public-Private partnership approach Wabuyele added that focus should be given not only to agricultural commodities but also to those which had the potential to achieve critical mass. 

“An exchange has got to have an IT platform and the right information as well as regulation. One of the mistakes we have seen being made, is the failure to see the need to bring volumes, it is far easier for an exchange to pay for itself, if there is big volume” Said Stewart Ponder, the senior Vice-President for Emerging markets at INTL FCStone. 

The Seminar being held by the London based financial advisory services firm INTL FCStone aims to give participants insight on components such as trading volumes and infrastructure in terms of clearing and settlement, regulation and trading platforms needed to instill confidence for a viable diversified commodities trading market in Kenya and East Africa.