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ARTICLE · 16 MARCH 2020

Derivatives Trading In Nigeria: The New SEC Rules Amendment

Brooks & Knights
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The Nigerian Securities and Exchange Commission (SEC) has decided to develop a derivatives trading market in Nigeria.

NigeriaFinance and Banking
Nnanke Williams
Nnanke Williams

Senior Consultant, Brooks & Knights Legal Consultants1

1. Introduction

The Nigerian Securities and Exchange Commission (SEC) has decided to develop a derivatives trading market in Nigeria. To this end, the SEC issued an amendment to its Rules and Regulations in December 2019, providing for new rules on the regulation of derivatives trading and on central counter party (CCP).2 In February 2020, the Central Bank of Nigeria (CBN) in collaboration with FMDQ Holdings Plc offered its first long-term Naira settled OTC FX Futures Contracts to hedge against foreign exchange (FX) risk, with a maximum tenor of 5 years and to be traded on the FMDQ OTC Securities Exchange.3 This combination of new rules and products is opening up derivatives trading in Nigeria to new investors and participants as both regulators seek to bolster the market and offer new risk management products.

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