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NGX says financial derivatives bolster economic devt

Financial derivatives

The Nigerian Exchange Limited (NGX), has said that financial derivatives play a pivotal role in contributing to economic development.

This, it said, is done by making risks manageable, enabling price discovery, and reducing transaction costs for both financial and non-financial firms.

Speaking at the sixth edition of its Market Data Workshop, yesterday, Chief Executive Officer, NGX, Temi Popoola, argued that “the innovation of financial derivatives in Nigeria and trading them through the organized Exchange will play a pivotal role in contributing to economic development.”

He however noted that “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.”

Themed, “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.”

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. 

Popoola also reiterated the importance of leveraging market data, saying: “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, he concluded, helps markets function more efficiently.

The conference featured presentations and panel discussions from speakers from the financial services sector, ICT, industry regulators, and the Academia.

This year’s workshop was held virtually in collaboration with official partners, including Zenith Bank, Reliance Infosystems Limited, Infoware, and MTN Nigeria. CSCS Plc was the Gold Sponsor, with United Capital, NG Clearing, Cordros Capital, Neulogic, Apel Asset Management and ARM as Corporate Sponsors.

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