NAIROBI, July 3 (Xinhua) -- Trading at the Nairobi Securities Exchange (NSE) derivatives market will kick off on Thursday, with the official launch expected on July 11.
Geoffrey Odundo, NSE chief executive, said the derivative market dubbed NEXT which trades equity index futures and single stock futures, provides new opportunities for investors, enabling them to better diversify their portfolios, manage risk, and deploy capital more efficiently.
"Futures contracts provide investors with risk management tools in the wake of unexpected volatility in asset prices. NEXT will also enable Kenya to consolidate its position as a leading financial services hub offering a wide variety of investment products," Odundo said Wednesday in a statement.
"The exchange will initially offer index futures contracts on the NSE 25 Share Index and single futures on Safaricom Plc, Kenya Commercial Bank Group Plc, Equity Group Holdings Plc, KenGen Co. Plc, East African Breweries Ltd, British American Tobacco Kenya Plc and Bamburi Cement Ltd," said Odundo.
He said the single stock futures have been selected based on several eligibility criteria, among them the security underlying the futures contract must be a listed instrument on the NSE.
"It must also demonstrate a minimum average daily turnover of 7 million shillings (68,627 U.S. dollars) over the last six months before review and must have a market capitalization of at least 490 million dollars," he said.
According to Odundo, all futures contracts listed on NEXT will have quarterly expiry dates, which will be the third Thursday of March, June, September and December of every year and the contract will be settled in cash.
"In line with global practice in safeguarding market infrastructure and investor interests, the NSE has also established the settlement guarantee fund and the investor protection fund," said Odundo.
