The Nairobi Securities Exchange(NSE) has become a signatory of the Sustainable Stock Exchange (SSE)’s derivatives exchanges network.
Joining this new network will allow the NSE to become an SSE Partner Exchange and work together with the initiative and its international network to further its sustainability efforts.
The SSE initiative is a UN Partnership Programme organised by UNCTAD, the UN Global Compact, UNEP FI and the PRI. The SSE’s mission is to provide a global platform for exploring how exchanges, in collaboration with investors, companies (issuers), regulators, policymakers and relevant international organizations, can enhance performance on ESG (environmental, social and corporate governance) issues and encourage sustainable investment, including the financing of the UN Sustainable Development Goals.
NSE Derivatives Market
“Our Derivatives Market is nascent and steadily growing and by joining the SSE Derivatives network we hope to participate in multi-stakeholder dialogue to build consensus on sustainable finance in derivatives markets and meet the growing demand for new sustainability aligned derivatives products across all asset classes. We are keen on introducing commodity derivatives that specifically align with sustainability objectives, such as those supporting the transition to a low carbon economy,” said Geoffrey Odundo, NSE Chief Executive.
Throughout the last decade, the role of Stock Exchanges and equity markets in driving sustainable development grown with the number of SSE members rising from 5 founding signatories to over 100 today.
Meanwhile, the potential of derivatives exchanges and the derivatives market remains less understood.
The new derivatives network and its founding signatories were announced in October 2021 as part of the UNCTAD World Investment Forum.
The SSE, together with the World Federation of Exchanges (WFE), published a new report this year, which provides an action menu on how derivatives exchanges can promote sustainable development.
The NSE has a put in place a number of sustainable initiatives with the most recent being the launch of the Environmental, Social and Governance (ESG) Guidance manual that will help companies navigate, comply with and stay ahead of regulations that require disclosure of ESG information.
NSE Derivatives Market (NEXT) is the Nairobi Securities Exchange (NSE) derivatives market that facilitates the trading of Equity Index Futures and Single Stock Futures contracts in the Kenyan market. NEXT is regulated by the Capital Markets Authority (CMA).
NEXT was established as a result of; Increased integration of the Kenyan financial markets with international markets, increased volatility in asset prices in local and international financial markets the need for more sophisticated risk management tools and strategies and the need to broaden and deepen Kenyan financial markets.
NEXT is the second derivatives market in Africa and has grown as a market and witnessed milestones such as the launch of the Mini NSE 25 index futures contracts, which goes a long way in increasing liquidity and encouraging broad exposure to the Kenyan equities market through the equity index futures contracts.
In February this year, the NSE introduced real-time Derivatives Market data on the Elektron Real Time platform offered by Refinitiv, a leading global financial markets infrastructure and data provider.
This initiative made Refinitiv the first international data vendor to onboard the NEXT data, extending the reach of the NSE derivatives market regionally and globally.