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NSE plans to launch derivatives market pilot test by December


NSE chief executive Geoffrey Odundo. FILE PHOTO | NMG

The Nairobi Securities Exchange (NSE) #ticker:NSE has announced plans to roll out a test launch of its long-delayed derivatives market within the next six months after obtaining the necessary approvals from the Central Bank of Kenya (CBK).

The NSE said Tuesday two banks out of the six it had earlier contracted for trade in derivatives had provisionally been cleared for the launch of the derivatives—instruments based on value of other commodities—market by CBK.

“The CBK has granted a provisional approval to the Stanbic Bank of Kenya and the Cooperative Bank of Kenya #ticker:COOP to participate as clearing and settlement members during the pilot testing phase,” said the Nairobi bourse in a statement.

The NSE had earlier signed up six banks including Barclays #ticker:BBK, Stanbic, NIC, Commercial Bank of Africa and Chase Bank (in receivership) as clearing houses for the planned trade in derivatives.

It had anticipated they would get regulatory approval from CBK this year, after a two-year delay.

“The Exchange looks forward to a successful completion of the pilot phase, which will inform stakeholders and regulators’ decisions on the official roll out of the derivatives market,” said NSE chief executive Geoffrey Odundo.

The establishment of a globally competitive derivatives market is in line with the NSE’s 2015 - 2019 strategic plan.

“The derivatives market will further enable trading and clearing of multi-asset classes, providing investors with an opportunity to diversify their portfolios,” said Mr Odundo.

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