NSE Eyes Listing of More Exchange Traded Products

The Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr. Oscar Onyema yesterday said more Exchange Traded Products (ETPs) would be listed soon.

ETP are a type of security that is derivatively priced and trades intra-day on an exchange. They are priced so the value is derived from other investment instruments, such as a commodity, a currency, a share price or an interest rate.

ETPs are one of the most significant financial innovations in recent decades and have shaped the financial markets. Since the introduction of ETPs in 1993, they have gained widespread acceptance in most developed markets.

However, the Nigerian market recorded the first ETP, which is the ABSA’s Newgold Exchange Traded Fund(ETF) in 2011.

Speaking at the annual ETPs Conference tagged: “Exchange Traded Products: Evolving investment themes, Accessing New Markets and Enhancing Portfolio Alpha,” in Lagos yesterday, Onyema disclosed that this year, in collaboration with issuers, they have focused on diversifying the ETPs space by supporting new product development and thus expect the launch of new ETPs in the short term. According to him, currently, there are nine ETPs listed on the NSE; two thematic ETFs providing access to pensioncompliant and Shariah-compliant stocks; two broad equity market ETFs tracking the NSE 30 Index; three sector based ETFs, one commodity ETF, and one bond ETF tracking exposure to benchmark FGN Sovereign Bonds.

“The introduction of ETPs is one of the exchange’s strategy to enhance diversification as well as broaden the options available in the capital market to support the efficient implementation of investment strategies across diverse asset classes and instruments,” he said.

Onyema said the conference provided insights on emerging themes as well as foster understanding of ETPs as convenient vehicles and investment management tools for accessing other markets. “Discussions sought to: identify solutions to challenges in the domestic market, as well as consider the potential for cross border listing of securities in Africa; expand the dialogue regarding the integration of African Financial Markets via the issuance of ETP vehicles and Depository receipts; provide the investment advisory and broker-dealer community with an understanding of their roles in distribution and capital mobilization, as well as provide direction to ETP issuers to support product development efforts in the medium term,” he said.

The NSE CEO encouraged ETPs issuers and intermediaries to expand their footprint by broadening distribution channels, introducing other asset classes/ strategies, entering new markets, leveraging technology and data analytics to understand the market and demand.