‘ Derivatives are useful tool for hedging financial risks’

THE Chartered Institute of Stockbrokers ( CIS) has stated that derivatives traded on the Exchange are essential in the market as they allow for market sophistication, transparent financial contracts as well as offer a useful risk management tool for implementing risk mitigation, or hedging strategies against financial risks.

President of the Institute, Oluwole Adeosun, said this while speaking at a virtual capacity- building workshop for Exchange Traded Derivatives stakeholders organised by the Nigerian Exchange Limited ( NGX) and the CIS with the theme, ‘ Exchange- Traded Derivatives: Enhancing the Capital Market for Robust Value Creation’.

Adeosun noted that the instruments also present an alternative in vestment acceptance useful for pursuing diversification and investment strategies.

Additionally, he mentioned that stockbrokers and securities traders have been undergoing a series of training on derivatives instruments and an adaption has been synchronized with the examination syllabus for securities traders and brokers.

In his opening remarks, the Chief Executive Officer , NGX, Temi Popoola, noted that the derivatives workshop is consis

tent with the shared aspiration of NGX and CIS to promote and protect the interests of the securities and investment profession by upholding the highest standards of service and integrity.

“Since 2017, the Exchange has been building the capacity of market stakeholders on derivatives, leveraging X- Academy , our learning and capacity development platform.

“We are pleased to collaborate with CIS in hosting this workshop aimed at facilitating a better understanding of how derivatives work, including how the contract is traded and settled on a day - to- day basis, the margining process, and risk management issues”, he

said.

Meanwhile, trading on the equities sector of the NGX Limited closed on a positive note, as MTN Nigeria Communications ( MTNN) and 17 stocks lifted index further by N130 billion.

In summary, the All- Share Index ( ASI) grew by 241.52 absolute points, representing 0.47 per cent increase, to close at 51,618.73 points. Similarly, the overall market capitalisation value gained N130 billion to close at N27.828 trillion.

The market positive performance was driven by price appreciation in large and medium capitalised stocks which are; MTNN, FBN Holdings ( FBNH), Union Bank of Nigeria ( UBN),

Ardova and Oando.