Towards the end of 2016, the NSE launched a new platform to facilitate the trade of derivative contracts. The Nairobi Securities Exchange Derivatives Market (NEXT) was started after a series of delays, being initially announced in 2014. Currently, NEXT only allows you to trade in two types of derivatives contracts, Single Stock Futures and Equity Index Futures.
Derivatives refer to a class of financial instruments whose value is derived (hence the name) from a different class of assets. These assets could be shares, bonds, currencies or even commodities such as wheat or gold and so on. These assets from which derivatives obtain their value are referred to as the underlying assets, or, more commonly, simply as the underlying. Most derivatives involve the purchase or sale of the underlying at an agreed date in the future for a price agreed upon today. This may all seem a bit complex, but consider the following Biblical example:
