This archive report was first published on 11 July 2019.
The Nairobi Securities Exchange (NSE) has taken a significant step towards deepening capital markets by launching a derivatives market.
According to NSE chief executive Geoffrey Odundo, the newly launched NEXT Derivatives Market will provide investors with risk management tools in the wake of increasing asset price volatility.
"The newly launched NEXT Derivatives Market will enhance investors' portfolio performance by making available risk management tools in the wake of increasing asset price volatility in both domestic and international markets," said Mr Odundo.
Derivatives are an investment tool whose value is derived from an underlying asset, such as bonds, commodities, currencies, interest rates, market indexes, and stocks, based on the expected future price movement of the asset.
They allow investors to make a gain or hedge against losses by taking a bet on the future price movement.
The NSE, which has been grappling with the challenges of setting up a derivatives market for years, becomes the second exchange in sub-Saharan Africa region after Johannesburg to launch trading.
Thursday, July 11, 2019
