Nairobi Securities Exchange (NSE) launched the trading of futures contracts on Thursday, offering investors index futures and single stock futures of the most heavily traded companies on the bourse.
The NSE, the main entry point for foreigners seeking to invest in East Africa, becomes Sub-Saharan Africa’s second bourse to offer exchange-traded derivatives after South Africa’s JSE.
Known as the Next Derivatives Market, it will offer investors index futures contracts on the NSE-25 share index and single stock futures on Safaricom, KCB Group, Equity Group, EABL and BAT.
Telecoms operator Safaricom, lenders KCB and Equity, brewer EABL and tobacco firm BAT are the most heavily traded and well capitalised stocks on the NSE.
Geoffrey Odundo, the chief executive of the securities firm, said the NEXT Derivatives Market will offer investors risk management tools “in the wake of increasing asset price volatility in both domestic and international markets.”
Listed futures will have quarterly expiry dates and will all be initially settled in cash, the NSE said.
Market participants said the futures contracts will allow investors to diversify their portfolios and deploy capital more efficiently.
They are also expected to deepen liquidity on the exchange, which has 65 listed companies.
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