May 29, 2019 / 12:49 PM / 5 months ago

UPDATE 2-Kenya's NSE gets regulatory approval for derivatives market

(Adds Nairobi Securities Exchange comment)

By George Obulutsa

NAIROBI, May 29 (Reuters) - Kenya’s Nairobi Securities Exchange has received regulatory approval to launch a derivatives market, the Capital Markets Authority said on Wednesday, and the exchange said it aimed to start futures trading in July.

The NSE, the main entry point for foreigners seeking to invest in East Africa, has been grappling with the challenges of setting up a derivatives market for years.

“This (approval) follows the successful completion of a six-month Derivatives Pilot Test Phase conducted between July and December 2018, and resolution of key issues that emanated from the test phase,” the CMA said in a statement.

Investors will initially be offered single stock futures and equity index futures, the CMA said, before other financial and commodity derivatives are introduced.

“The Exchange expects to commence trading of futures contracts in July 2019,” Geoffrey Odundo, NSE chief executive, said in a statement.

Exchange executives have said derivatives trading would boost liquidity on the bourse, which has 65 listed firms of which telecoms and banks are some of the most heavily traded.

The NSE will be the second exchange in Sub-Saharan Africa after Johannesburg to launch trading in derivatives.

Kenya’s Stanbic Bank, part of Stanbic Holdings and Co-operative Bank of Kenya, have been licensed by the central bank to handle clearing and settlement for the derivatives exchange, the CMA said. (Reporting by George Obulutsa Editing by Duncan Miriri; Editing by Kirsten Donovan and David Evans)

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