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Coast clears for Nigeria’s exchange-traded derivatives

December 13, 2021

The Nigerian capital market witnessed a monumental milestone as NG Clearing Limited, the first Central Counterparty (CCP) in West Africa, formally launched its operations.

The launch of NG Clearing on Thursday, December 9 as a CCP means that exchange-traded derivatives are now a possibility in the Nigerian capital market.

As a Financial Market Infrastructure (FMI), NG Clearing facilitates the clearing and settlement of exchange-traded derivatives, management of counterparty risk, reduction of systemic risk, and promotion of the safety and integrity of Nigeria’s capital market.

This opens new and clear opportunities for investors, stakeholders, and other players in Nigeria’s capital market. The event was hybrid and it had a mix of high-profile physical and virtual participants.

Having been incorporated in 2016 and having also gotten the Securities and Exchange Commission’s nod to begin operations in June 2021, the launch of NG Clearing culminates in a long journey towards the creation of a world-class- post-trade services provider with a focus on advanced capital market offerings.

NG Clearing Limited (“NG Clearing”) is Nigeria’s premier central counterparty (CCP) and serves as a market-wide financial market infrastructure (FMI) in Nigeria.

The Secretary-General to the Government of the Federation, Boss Mustapha, was represented by Paul Kanu. The Governor of Lagos State was also represented by Alake Sanusi.

The legislative arm of the Nigerian Government was represented by Honorable Babangida Ibrahim, the Chairman, House Committee on Capital Markets.

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The Governor of Edo State, Godwin Obaseki, the Minister of Finance, Zainab Shamsuna Ahmed, the Minister of Trade, Industry and Investment, Adebayo Adeniyi, the Director-General of the Securities and Exchange Commission (SEC) Lamido Yuguda, the CBN Deputy Governor, Financial Systems Stability Directorate, Aisha Ahmad, and Tony Elumelu, Chairman of Heirs Holdings and Africa’s philanthropist and entrepreneurial icon, all participated virtually with speeches and special remarks.

In his opening speech, the Managing Director and Chief Executive Officer of NG Clearing Limited, Tapas Das, expressed delight as he stressed the monumental significance of NG Clearing’s launch for the Nigerian capital Market. He linked the emergence of NG Clearing to the maturity of the Nigerian financial ecosystem stating that: “With Nigeria’s capital market maturing into offering advanced capital market products such as futures derivatives, it is only ideal to establish a CCP, in line with global best practices.”

“The emergence of NG Clearing is not only an indication of our collective growth as a market but also a marker of the forward looking intent of the Nigerian capital market”.

He went on to describe the company’s vision as well as the depth of capacity in place to ensure NG Clearing delivers on its vision. He explained that: “Our vision is to become Africa’s most trusted CCP. With this vision in mind, we have left no stone unturned in ensuring that we offer world-class infrastructure, transparent and resilient processes, with an experienced team of worthy professionals.”

Oscar N. Onyema, Chairman of NG Clearing chronicled the origin of the NG Clearing dream in his address. He stated that: “The NG Clearing dream was borne out of a firm commitment to position the Nigerian capital market as a stable and resilient market that offers local and foreign investors sound opportunities without compromising global standards.

On this premise, we took steps to identify the gaps that inhibit our market from attaining this positioning. One of the gaps we identified was the absence of the financial market infrastructure known as a CCP.” He also noted that having a CCP is key to the realization of the Nigerian capital market master plan.

The Minister of Finance, Zainab Shamsuna Ahmed noted that NG Clearing’s emergence will contribute to the post-covid-19 recovery of the Nigerian economy. She also mentioned that: “a door of new possibilities has been opened for growth and development of the Nigerian economy”.

In a similar vein, the Minister of Industry, Trade and Investment, Adebayo Adeniyi, opined that: “NG Clearing’s emergence redefines Nigeria’s financial landscape, creating endless possibilities for products that can be developed and deployed”.

The Director-General of the Securities and Exchange Commission, Lamido Yuguda asserted that the launch of NG Clearing as a CCP is historic for the Nigerian capital market. In his words, “the services of NG Clearing will help in deepening the market while placing it on the right path to achieving the required sophistication, depth, and breadth in terms of products and service offerings.” He went on to note that the SEC will continue to deliver on its mandate of ensuring the Nigerian capital market is safe, orderly, and built on integrity.

Aisha Ahmad, the CBN Deputy Governor, Financial Systems Stability Directorate, gave special remarks. She extensively detailed the important roles of NG Clearing in driving stability in the ecosystem. She also stressed the need to adopt sustainable approaches that contribute to the combating of climate change.

The Governor of Lagos State, Babajide Sanwo-Olu, as well as the Governor of Edo State, Godwin Obaseki, profusely congratulated the Board and Management of NG Clearing on the laudable feat of establishing the first CCP in West Africa.

At the event, there was a virtual in-depth panel session on how NG Clearing as a CCP will contribute to the resilience of Nigeria’s financial system. The session had Teo Floor, CEO of CCP12 (the Global Association of Central Counterparties), Alicia Greenwood, CEO of JSE Clear (South Africa), Narendra Ahlawat, CEO of Multi Commodity Exchange Clearing Corporation (MCXCCL, India), Uche Orji, CEO of the Nigeria Sovereign Investment Authority (NSIA), and Ayodeji Balogun, CEO of AFEX Commodities.

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