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Slow start to derivatives trading at NSE

In Summary

• Investors bought two single stock futures contract for Safaricom and EABL at Sh28,900 and Sh19,974 respectively expected to expire in September.

• This is despite the inclusion of other listed stocks including KCB, Equity and British American Tobacco (BAT).

NSE chief executive Geoffrey Odundo monitors the daily trading at the Nairobi Bourse
NSE chief executive Geoffrey Odundo monitors the daily trading at the Nairobi Bourse
Image: ENOS TECHE

Nairobi Stock Exchange oversaw the sale of two contracts on commencement of derivates market on July 4 worth Sh48,000, the securities exchange has said.

Investors bought two single stock futures contract for Safaricom and EABL at Sh28,900 and Sh19,974 respectively expected to expire in September, despite the inclusion of other listed stocks including KCB, Equity and British American Tobacco (BAT).

There was no purchase of the equity index future contract, alluding to investor preference for the single stock futures contracts according to Cytonn Investment firm.

“We are of the view that there needs to be more transparency on the contracts that are traded and the open positions of the buyers of the futures contracts,” Cytonn Investments said.

"We view this as an important aspect given the impact on equity prices it may have, in the event of significant trade in the futures contracts."

NSE derivatives markets, NEXT is expected to manage the risks associated with price movements of the securities and giving investors to profit from it.

On its  beginning in the market, the trading is expected to attract more investors especially, retail investors due to their low trading fees at 0.14 per cent and 0.17 per cent of the contract value for the equity index and single stock futures respectively.

This is compared to direct equity brokerage costs ranging between one per cent and 2.2 per cent of the contract value.