Derivative Settlement: SEC Endorses NG Clearing Limited As Nigeria’s Central Counterparty

Nigeria’s Apex Capital Market Regulator, the Securities and Exchange Commission (SEC) has granted NG Clearing Limited (NG Clearing) registration to perform the function of a central counterparty (CCP) with effect from 7th June 2021.

This registration now permits NG Clearing to clear and settle Exchange traded derivative products – making NG Clearing the first CCP in Nigeria.

Speaking on the issuance of the license, the Chairman of NG Clearing, Oscar Onyema, reiterated the Company’s readiness to deliver an unparalleled CCP experience for the Nigerian financial and capital markets. “NG Clearing’s will optimize the deployment of its resources to achieve long-term value creation for its stakeholders using a state-of-the-art risk management framework, which complies with global best practices for mitigating settlement risk”. Onyema said.

“The company’s main role is to improve the soundness and safety of the Nigerian financial market by delivering best-in-class post-trade services that manage counterparty credit risk and reduce systemic risk by interposing itself as a guarantor to both parties in a transaction, thus ensuring the successful execution of derivatives and other trades from various trade points in Nigeria.” He added.

For his part, the Managing Director of NG Clearing, Tapas Das, assured the investing public that the company will not disappoint in maintaining a stable and reliable market place.

In his words: “NG Clearing shall be playing a key role in the financial market ecosystem in the region, upholding stability and safety of the marketplace, through efficient and timely settlement of derivative trades. The aim is to strengthen the country’s investment environment through solutions that systematically reduce risks, enhance operating efficiency, and minimize costs for all market participants, thereby serving as a catalyst to national development.”

He noted that the company has sufficient financial resources, including settlement guarantee fund, to cover participants’ risk exposures adding that members will have access to a wide range of financial reports to equip them with extensive knowledge and enable them make informed decisions, and have access to NG Clearing’s bespoke clearing and settlement software application.

NG Clearing – Nigeria’s premier CCP – was incorporated on May 24, 2016 to facilitate derivatives trading in the Nigerian Capital Market. The company is promoted by the Nigerian Exchange Group and Central Securities Clearing System (CSCS) along with key stakeholders including Nigeria Sovereign Investment Authority (NSIA), Access Bank, Consonance Kuramo Special Opportunities Fund I, Coronation Merchant Bank Limited, Greenwich Merchant Bank Limited, Union Bank of Nigeria, United Bank for Africa and Association of Securities Dealing Houses of Nigeria (ASHON).

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