Business
Experts Task Regulators On Derivatives Market
Financial experts in Lagos urged the regulatory agencies to make the derivatives market attractive, ahead of its roll-out in the country.
They stated this at the Opening of a 2-day Nigerian Structured Products Summit with the theme, “Derivatives and other Financial Instruments,” organised by the Capital Market Solicitors’ Association in Lagos, yesterday.
The Managing Partner, Redix Legal and Consulting Ltd, Mrs Elizabeth Uwaifo, said that derivatives needed to be attractive to potential inventors.
According to her, derivatives, if bought into, can be used to generate steady incomes which afford investors the opportunity to secure their future.
Uwaifo said that one of such derivatives was agricultural commodities, which she noted that the banks were not lending enough support.
She, however, urged banks to be encouraged in lending more to the agriculture sector, as it was capable of generating more revenue for the nation.
The managing partner said that an institution could be set up for the management of likely risks that could emanate from the agriculture sector.
According to her, the establishment of such institution would help to encourage the banks to be attracted to the derivatives market.
A representative of FBN Capital, Mr Micheal Okon, said that the derivatives market had complexity and needed good regulatory and capital frameworks.
Okon noted that having that in place would also help contracts to be standardised, as well as hedge against risks in the future.
Chief Executive Officer of Graeme Braque Advisory, Mr. Zeal Akaraiwe, said that the derivatives market was a complex one, which entailed having a proper understanding of how it works.
Akaraiwe said that the complexity in the market meant that there should be continuous and regular information on it for investors.
He added that the market had the potential to grow once there was an enabling environment that would make it to thrive.
Also, Mrs Yinka Edu, the Chairman of the Capital Market Solicitors Association of Nigeria, said that the market was quite technical.
This, she added, was set to expand due to the initiative of the FMDQ OTC Securities Exchange Plc., and the Nigerian Stock Exchange.
Edu said the introduction of the foreign exchange futures had also made it a topical issue.
According to her, the foreign exchange futures had attracted interest beyond the relatively small market of banks and other corporate organisations that had previously entered into bilateral OTC derivatives contracts.
“We know that there are issues around derivatives that need to be addressed.
“We are mindful of the desirable benefits and significant risks that derivatives carry.
“There is no better forum for us to deliberate on the commercial appetite for derivatives on legal, regulatory and market frameworks for derivatives,’’ Edu added.
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