NSE: Derivatives to enhance equities’ market
The introduction of derivatives market in Nigeria’s capital market will further enhance market’s depth, vibrancy, offering and capitalization, as well as offering investors more earning opportunities.
This was disclosed on Wednesday, in Lagos, Nigeria, by The Nigerian Stock Exchange (NSE), during the commencement of the three days’ derivatives training themed: “Corporate and investment applications of derivatives.”
Executive Director, Business Development Nigerian Stock Exchange (NSE), Mr. Jalo Haruna Waziri, in his opening remark at the programme, commended the participants for subscribing to have undiluted knowledge on derivatives, corporate and investments’ applications.
He said that an understanding of issues in the derivatives’ market, enables the market operators and other market operators to know the applicative of equity derivatives and the opportunities of earning; and leveraging on the opportunities further creates wealth in the market.
Waziri expressed confidence when the workshop ends on 29th September, participants would have been quipped enough to understand the derivative market and application of the knowledge to earnings when derivatives’ trading eventually commences in our market.
One of the facilitators, Paul Kitching, a financial trainer from the United Kingdom, in his lectures at the DAY 1, workshop introduced derivatives, , market infrastructures OTC Vs ETDS (Exchange traded Derivatives, pricing valuations amongst others, said that derivatives offer opportunities and challenges over equities.
According to him, derivatives offer good earning opportunities in the market that take advantage of it, hence derivatives cheaper cost of trading over cash equities, enjoys no stamp duty, however depending on the contract design.
Kitching said that derivatives can create synthetic positions cheaper, enjoys lower cost of trading for captive traders; and has the ability to get market exposure quickly, cheaper without market impact programe trading.
He further explained that derivatives has the ability to short sell fast by a second, enables value trading , hedging and asset allocations.
He explained core characters of equity derivatives as, ability to leverage, tax treatment, tailoring of risk/ reward profile and standardized documentation.
He, however explained that irrespective of the allures of the derivatives market, there are also issue that impede the instrument from market growth, such as restrictions by traditional funds, increased credit exposure among others.
