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In Nigeria, the emergence and growth of the derivatives market is relatively a recent phenomenon.
Whereas the growth of derivatives has increased tremendously over the last decade with a record of
aboutUS$ 638,923 billionasthe notional value of derivativesasof endJune,2012, derivativesare yetto
be embraced in its fullest capacity in Nigeria. Its presence is however slowly creeping into the financial
system of the country. Very recently, the Central Bank of Nigeria (CBN) have issued guidelines for the
introductionof FXderivativeswhichessentiallypermitscertainvariantsof derivativestobe employedas
hedging tools in the foreign exchange market by authorized dealers and investors alike on a strictly
regulated basis. Mr. Oscar Onyema, CEO, Nigerian Stock Exchange has also indicated commitment to
expand product offerings on the Nigerian Stock Exchange with the creation of an options market by
2013/2014 whichwill essentiallytrade stockoptions,bondoptionsandindexoptions.A futuresmarketis
also proposed to be created in 2016 comprising of currency futures and interest rate futures.
Variousproductsofferingsshouldbe implementedtoenhance the creditstructuresandtohedge against
interestrate andcurrencyexchangerate risksthat mayhave animpactonthetransactions.Thiswill surely
have an impact on the Capital Market, and in readiness for transactions of this nature,the SEC and NSE
hasinfurtherance of itsgoal todevelopthe market,are takingstepstoenhance thecapacity of itsofficers
on the securitization, mortgage backed securities and other exotic financing mechanisms.
Without any doubt, these developments are the foundation steps in the right direction towards
liberalizing the Nigerian Capital Market making sure that the much clamored diversification of the
investment becomes possible in Nigeria in the near future.

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WIP - Nigerian Derivatives Markert - extract 201603

  • 1. In Nigeria, the emergence and growth of the derivatives market is relatively a recent phenomenon. Whereas the growth of derivatives has increased tremendously over the last decade with a record of aboutUS$ 638,923 billionasthe notional value of derivativesasof endJune,2012, derivativesare yetto be embraced in its fullest capacity in Nigeria. Its presence is however slowly creeping into the financial system of the country. Very recently, the Central Bank of Nigeria (CBN) have issued guidelines for the introductionof FXderivativeswhichessentiallypermitscertainvariantsof derivativestobe employedas hedging tools in the foreign exchange market by authorized dealers and investors alike on a strictly regulated basis. Mr. Oscar Onyema, CEO, Nigerian Stock Exchange has also indicated commitment to expand product offerings on the Nigerian Stock Exchange with the creation of an options market by 2013/2014 whichwill essentiallytrade stockoptions,bondoptionsandindexoptions.A futuresmarketis also proposed to be created in 2016 comprising of currency futures and interest rate futures. Variousproductsofferingsshouldbe implementedtoenhance the creditstructuresandtohedge against interestrate andcurrencyexchangerate risksthat mayhave animpactonthetransactions.Thiswill surely have an impact on the Capital Market, and in readiness for transactions of this nature,the SEC and NSE hasinfurtherance of itsgoal todevelopthe market,are takingstepstoenhance thecapacity of itsofficers on the securitization, mortgage backed securities and other exotic financing mechanisms. Without any doubt, these developments are the foundation steps in the right direction towards liberalizing the Nigerian Capital Market making sure that the much clamored diversification of the investment becomes possible in Nigeria in the near future.