Kenya is to have its derivatives market, raising the profile of the country as one of the largest financial hubs in sub-Saharan Africa. This comes as the Nairobi Securities Exchange ( NSE) announced that it had received the green light to set up and operate a derivatives exchange from the Capital Markets Authority. Kenya now follows security exchanges in the continent’s power houses Nigeria and South Africa in setting up the investment vehicles.
“Derivatives are among the most affordable and convenient means companies can cushion themselves against interest rates fluctuations, exchange rate volatility and commodity prices,” said NSE Chairman Eddy Njoroge.
“The establishment of a derivatives market is a step towards growing the NSE brand and shareholder value and is in line with Kenya’s goal of deepening our capital markets and making Nairobi the financial services hub of East Africa.”
Kenya has been trying for a long, time to set up a derivatives market but the process has been hampered by administrative and legal concerns. The NSE said this new development will see investors invited to trade in a myriad of investment vehicles at the same time take a part in the country’s agricultural sector which accounts for the largest value of Kenya’s gross domestic product.
“The NSE will establish a globally competitive derivatives exchange that will enable spot and futures trading of multi-asset classes including equities, currency, interest rate products as well as varied forms of agricultural commodities contracts,” stated acting Chief Executive Andrew Wachira.
“The Exchange has invested in the development of the derivatives market to ensure that it will meet global standards including mechanisms for trading, clearing and settlement of the instruments traded.”