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Options and Derivatives Trading on NSE
Rank: Chief Joined: 8/4/2010 Posts: 8,977
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murchr wrote:NAIROBI (Reuters) - Kenya's Nairobi Securities Exchange has delayed the roll out of a derivatives market to this quarter from the earlier target date of the second quarter to adequately prepare the market for the launch, it said on Wednesday. NSE plans to offer derivative instruments, becoming the second bourse in Sub Sahara Africa to do so after Johannesburg, in a bid to boost liquidity. [ID:nL5N0W81II] "The launch has been deferred slightly. We are targeting this quarter," the bourse said. "It is imperative that prior to launch of this product, the market understands clearly the positive impact of derivatives as tools to manage investment risk," it said. Progress had been made towards the setting up of the market, the NSE said, citing the establishment of a clearing house, a guarantee fund and an oversight committee made up of industry professionals. NSE wants to become the third biggest exchange on the continent, up from fifth currently, its chief executive, Geoffrey Odundo told Reuters in March. The Kenyan bourse serves as an entry point for foreign funds looking to tap into fast economic growth rates in east Africa but it currently ranks behind South Africa, Nigeria, Egypt and Morocco in terms of market size. (Reporting by Duncan Miriri; Editing by James Macharia) Someone is jittery. Perfect timing when the market is sliding! The next NSE20 bull cycle will definitely take out 6161 as derivative gain popularity.$15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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Rank: Elder Joined: 7/11/2012 Posts: 5,222
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mibbz wrote:mukiha wrote:mukiha wrote:So, Jack has a million SCOM shares which he promises to sell to John at 7 bob each On 1st June. As a sign of commitment, John pays Jack 10 cents each....100k in total....
SCOM declares 30bn profit and demand shoots to 10 bob.....shares are short supply....but Jane wants some, so she goes to Jack and he tells her that he had promised to sell to John....so she goes to John and offers him 50cents for the right to buy from Jack....he pockets the 500k and transfers the rights to Jane
Jane rushes to Jack, buys the 1m shares at 7m and then sells them in the open market and makes 2.5m
All so fine....until Jane decides to sell the rights to Joe at one bob each instead of executing them [making 500k], and Joe sells them over to Jill at 1.50 [also making 500k] and Jill sells to Jim at 2 bob [another 500k] ...and so on......eventually we have a market for these rights which in reality don't have any hard value...they are just a promise to do something!
... and I could also go to Jim and promise him that I will buy his rights at 2.50 on May 31....thereby making a promise to buy a promise to buy SCOM shares.... the whole thing loses meaning and because the distance from reality (SCOM shares) has increased greatly, the propensity to break the promise increases as well.... it is psychologically easier to shoot a person with a gun from 10m away that it is to hack him with a panga from 1m away! thanks for the simple explanation.Alwayys wondered what derivatives and options involved and i can see its all about playing smart with imaginary holdings.We definately are not ready for such,in fact market can easily crush Thank you too @Mukiha for the easy-to-understand example. Yes, it sounds risky but it does sound exciting too. Mimi ndani
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Rank: Chief Joined: 1/3/2007 Posts: 18,103 Location: Nairobi
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3Q ... more likely in 4Q Or a soft launch in 3Q. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 2/26/2012 Posts: 15,980
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The Capital Markets Authority (CMA) is stepping up preparations for the introduction of an exchange for derivatives, which are used for hedging risk. The CMA has partnered with the Dubai Financial Services Authority to train local players on how the proposed exchange will work. The derivatives market is one of the key targets for the CMA and so far the regulators has set out the rules for market players. http://www.businessdaily.../-/14ng978z/-/index.html"There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
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Rank: New-farer Joined: 6/22/2015 Posts: 51 Location: Nairobi
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maka wrote:sl8r wrote:SOOOO,
I was thinking, is it viable to trade in options and derivatives on this here NSE. My understanding is that the Johannesburg Stock exchange does so, albeit its 400+ listings compared to the NSE's about 50, however I think the market here is speculative enough to engage in this....
what do you all think?? ...bado we still havent got the right structures to implement options and derivatives trading...trading in equities and fixed income is still a mess we need to sort that out first. Do we have the right structure now?  A Theory of Everything.
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Rank: Elder Joined: 11/7/2007 Posts: 2,182
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Hapa Kuna kizungumkuti LOVE WHAT YOU DO, DO WHAT YOU LOVE.
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Rank: New-farer Joined: 5/20/2010 Posts: 69
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aljazeera wrote:maka wrote:sl8r wrote:SOOOO,
I was thinking, is it viable to trade in options and derivatives on this here NSE. My understanding is that the Johannesburg Stock exchange does so, albeit its 400+ listings compared to the NSE's about 50, however I think the market here is speculative enough to engage in this....
what do you all think?? ...bado we still havent got the right structures to implement options and derivatives trading...trading in equities and fixed income is still a mess we need to sort that out first. Do we have the right structure now? Some of it is ready, we can trade futures for now NSE gets nod for futures exchange
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Rank: Member Joined: 8/15/2015 Posts: 817
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sl8r wrote:aljazeera wrote:maka wrote:sl8r wrote:SOOOO,
I was thinking, is it viable to trade in options and derivatives on this here NSE. My understanding is that the Johannesburg Stock exchange does so, albeit its 400+ listings compared to the NSE's about 50, however I think the market here is speculative enough to engage in this....
what do you all think?? ...bado we still havent got the right structures to implement options and derivatives trading...trading in equities and fixed income is still a mess we need to sort that out first. Do we have the right structure now? Some of it is ready, we can trade futures for now NSE gets nod for futures exchange is this some form of tease or what ?LETS GET MOVING NSE !!!!!!!!!!!!!!!!. damn those futures!
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Rank: Member Joined: 1/13/2012 Posts: 139
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Lets this thing start. We need a market that has volumes, volatility and where one can make money long or short. Day trading shall be a career and expansion of capital markets for the better. 
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Rank: New-farer Joined: 5/20/2010 Posts: 69
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Rank: New-farer Joined: 1/12/2016 Posts: 19
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Warren Buffet calls them 'Financial Weapons of Mass Destruction' for a reason
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Rank: Elder Joined: 7/22/2008 Posts: 2,703
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joga bonito wrote:Warren Buffet calls them 'Financial Weapons of Mass Destruction' for a reason I agree. I think this is particularly bad for our bandit economy where values mean nothing. This will create a crop of very wealthy wheeler dealers who create nothing add no value to the economy and yet appear and have all the trappings of success. I may be wrong but this is a very bad idea for a young and small market like NSE. Even in large markets the so called advantages of increasing liquidity in the market are overrated. They create more greed and speculation than anything else.
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Rank: New-farer Joined: 5/20/2010 Posts: 69
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Kusadikika wrote:joga bonito wrote:Warren Buffet calls them 'Financial Weapons of Mass Destruction' for a reason I agree. I think this is particularly bad for our bandit economy where values mean nothing. This will create a crop of very wealthy wheeler dealers who create nothing add no value to the economy and yet appear and have all the trappings of success. I may be wrong but this is a very bad idea for a young and small market like NSE. Even in large markets the so called advantages of increasing liquidity in the market are overrated. They create more greed and speculation than anything else. it all depends on how you use these securities Simply put, Greater Cost Efficiency Less Risk Higher Potential Returns More Strategic Alternatives The tricky part may be understanding the securities and using them properly to your advantage. Are there risks involved? absolutely, but investors also incur some level of risk when dealing in stocks The 4 Advantages of OptionsAnd for good measure
Advantages and disadvantages of Options
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Rank: New-farer Joined: 1/12/2016 Posts: 19
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sl8r wrote:Kusadikika wrote:joga bonito wrote:Warren Buffet calls them 'Financial Weapons of Mass Destruction' for a reason I agree. I think this is particularly bad for our bandit economy where values mean nothing. This will create a crop of very wealthy wheeler dealers who create nothing add no value to the economy and yet appear and have all the trappings of success. I may be wrong but this is a very bad idea for a young and small market like NSE. Even in large markets the so called advantages of increasing liquidity in the market are overrated. They create more greed and speculation than anything else. it all depends on how you use these securities Simply put, Greater Cost Efficiency Less Risk Higher Potential Returns More Strategic Alternatives The tricky part may be understanding the securities and using them properly to your advantage. Are there risks involved? absolutely, but investors also incur some level of risk when dealing in stocks The 4 Advantages of OptionsAnd for good measure
Advantages and disadvantages of Options in this era of central banks controlling the market it is important to mitigate yourself against their decisions with derivatives as long as DEFAULT risk is checked
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Rank: Veteran Joined: 4/16/2014 Posts: 1,420 Location: Bohemian Grove
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can't wait for the launch 
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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whiteowl wrote:can't wait for the launch The two biggest banks in Kenya ie Simba and Memba are missing from that list! Life is short. Live passionately.
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Rank: Member Joined: 5/30/2016 Posts: 332 Location: Kayole
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whiteowl wrote:can't wait for the launch @bundi mweupe any 411 on the launch date? we urgently need this to short crap stocks in the market. people holding air burgers watalia KEGN, KPLC, KQ, SCOM
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Rank: Member Joined: 5/30/2016 Posts: 332 Location: Kayole
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NSE to raise capital to enable start of derivatives marketYesterday Odundo declined to give an exact date but assured the market will go live before the end of 2016. “We are very close to launch, we are just tightening up the loose ends,” he said. Indian firm- Chella Software is helping with the roll out. KEGN, KPLC, KQ, SCOM
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Rank: Chief Joined: 8/4/2010 Posts: 8,977
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The golden handcuffs would have made me a bucketload of cash if short selling stocks was already running at NSE. This year the banking ETF (if they'll form one) would have been on my shorting list for easy money. $15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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Rank: Elder Joined: 5/25/2012 Posts: 4,105 Location: 08c
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Quote:NAIROBI SECURITIES EXCHANGE RECEIVES CAPITAL MARKET AUTHORITY APPROVAL FOR PILOT PHASE TESTING OF ITS DERIVATIVES MARKET
Nairobi, May 14,2018...The Nairobi Securities Exchange (NSE) has received approval to undertake a Pilot Phase Test for the Derivatives Market within the next six months. This follows NSE’s satisfactory fulfilment of the requirements set out in Section 36A of the Capital Markets Act and The Capital Markets (Derivatives Markets) Regulations, 2015.
The approval will enable the Exchange to commence a Pilot Phase Test of the Derivatives Market, which will be restricted to select market participants and a select product category It will focus on Equity Indexes and selected Single Stock Derivatives. The
overarching aim of the pilot phase, is to test the functionality and process of end to end transactions in a live environment.
In line with it’s mandate to maintain efficient and smooth functioning financial markets, the Central Bank of Kenya (CBK) has granted a provisional approval to the Stanbic Bank of Kenya and the Co-operative Bank of Kenya to participate as clearing and settlement
members during the pilot testing phase.
Commenting on the announcement, the NSE Chief Executive, Mr.Geoffrey Odundo said “The Exchange is deeply grateful for the continued support it has received from the regulators Capital Markets Authority (CMA) and CBK, the two banking institutions (Stanbic
Bank of Kenya Ltd and the Co-operative Bank of Kenya Ltd), trading members and other stakeholders; and looks forward to a successful completion of the pilot phase which will inform stakeholders and regulators decisions on the offical roll out of the Derivatives
Market.
He added “The establishment of a globally competitive Derivatives Market is in line with the NSE’s 2015 – 2019 strategic plan, which aims to increase listings in the Exchange while enhancing product innovation.The Derivatives Market will further enable trading and
clearing of multi-asset classes, while providing our investors with an opportunity to further diversify their portfolios.”
Notes to the Editor
Derivative
A derivative is a financial instrument between two parties based upon the assets. Its price is determined by fluctuations in the underlying asset (which includes stocks and market indexes).
Globally, derivatives markets have played an important role in the hedging and price discovery in markets with growing GDPs, instability in the pricing of underlying products and volatile rates of inflation. As at the end of the year 2017, the World Federation of Exchanges (WFE), noted a total number of 25.03 billion derivatives contracts traded in 2017. Total volumes traded as compared to 2005, are up 170.4%, representing an average annualised growth rate of 9.3% over the last twelve years.
About Nairobi Securities Exchange (NSE)
The Nairobi Securities Exchange (NSE) is the principal securities exchange of Kenya.
Besides equity securities, the NSE offers a platform for the issuance and trading of debt securities. The NSE is a member of the African Securities Exchanges Association (ASEA) and the East African Securities Exchanges Association (EASEA). It is a full member of the Association of Futures Markets (AFM) a full member of the World Federation of Exchanges (WFE), and a partner Exchange in the United Nations Sustainable Stock Exchanges Initiative (SSE).
Pesa Nane plans to be shilingi when he grows up.
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