October 30, 2024October 30, 2024

Nairobi Bourse Expands Investor Choices with New Options Derivatives

Posted By: keaton

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The Capital Markets Authority has approved the introduction of options derivative trading at NSE
The NSE operates the NSE derivatives market, which facilitates the trading of futures contracts in the Kenyan market
NSE will conduct investor education and additional tests with clearing and trading members to support rollout

Elijah Ntongai, a journalist at TUKO.co.ke, has more than three years of financial, business, and technology research and reporting expertise, providing insights into Kenyan and global trends.

Nairobi Securities Exchange Plc (NSE) has received approval from the Capital Markets Authority (CMA) to establish options derivatives trading on NEXT.

NSE CEO Frank Mwiti (2nd from left) and NSE chairman Kitonny Kiprono (2nd from right) during a past meeting. Photo: @NSE_PLC.
Source: Twitter

NEXT is the NSE derivatives market that facilitates the trading of futures contracts in the Kenyan market.

The introduction of options contracts aims to develop and deepen the derivatives market in Kenya by expanding the suite of financial instruments available to investors.

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“The NSE is delighted to receive approval to launch Options on Futures contracts on the NSE. The introduction will provide investors new instruments to support efficient capital deployment whilst offering advanced risk management tools enabling hedge against adverse price movements in the underlying contracts,” said the NSE CEO Frank Mwiti.

What are options derivatives?

Options are financial derivatives contracts that give buyers the right, but not the obligation, to buy or sell an underlying asset at an agreed-upon price and date.

In a press release NSE stated that investors will be able to trade Options on the existing NSE futures contracts for single stocks and indices.

NSE plans to introduce a wider variety of financial derivatives to provide investors with more investment opportunities that complement their strategies and investments in other exchange-traded products to support enhanced returns and risk management.

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To support the rollout, NSE will conduct investor education and additional tests with clearing and trading members, ensuring robust risk management.

This expansion aligns with NSE’s goal of building a world-class market infrastructure, enhancing investor trust and catering to evolving market needs.

NSE partners with UK MOBILIST to increase listed products

In other news, NSE and the UK’S MOBILIST programme launched a new partnership aimed at driving the listing of new investment products in Kenya.

His Majesty’s Trade Commissioner for Africa, John Humphrey, attended the launch event in Nairobi as part of his three-day visit to Kenya.

The MOBILIST programme, part of the UK government’s broader investment strategy, will start receiving applications from Kenyan businesses.

Proofreading by Mercy Nyambura Guthua, journalist and copy editor at TUKO.co.ke

Source: TUKO.co.ke

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