The Nigerian Stock Exchange plans to start trading naira futures that will help investors hedge against movements in the local currency, Chief Executive Officer Oscar Onyema said.
“It would be awesome if we had a naira-dollar contract that we could trade on the exchange,” he said in an interview in London on Monday. “Futures and options are asset classes that we think would be very beneficial to foreign investors.”
The bourse might offer futures by the end of 2017, Onyema said. Traders and bankers have called for a loosening of controls enforced by central bank Governor Godwin Emefiele to protect the currency of Africa’s biggest oil producer against a 45 percent slump in Brent crude prices in the past year. The naira has weakened 18 percent against the dollar in that period.
Plans for this year include a “premium board for large-cap securities that meet the highest corporate governance standards,” the CEO said. A Nigerian depositary receipt program, which will allow local investors to access foreign-listed companies on the domestic market, is also in the works, he said.
There’s a “very rich pipeline” of companies that may start trading their shares this year depending on market conditions, including businesses that could list securities in London and Lagos, Onyema said.
Nigeria’s benchmark stocks index added 0.4 percent on Monday, its first gain in five days, cutting this year’s loss to 3.7 percent. That compares with a 5.4 percent drop for the MSCI Frontier Markets Index year to date.
“We’re seeing interest” in initial public offerings and secondary listings from oil and gas, fast-moving consumer goods, telecommunication and industrial-goods companies, Onyema said. “Dual listing will be part of the pitch.”