October 01, 2020 / 3:03 PM / CSCS / Header Image Credit:RBCits
NG Clearing Limited has secured approval in principle from the Securities and Exchange Commission (SEC) to launch clearing and settlement of Exchange-traded derivative products, as Nigeria's premier Central Counterparty Clearing House (CCP).
NG Clearing's role as a CCP in Nigeria's financial ecosystem is to ensure the safety of the market by managing counterparty credit risk, which in turn, reduces the systemic risk in the Nigerian capital market, by guaranteeing the settlement of trades.
main role is to improve the safety of our financial market by delivering best-in-class post-trade services that manage counterparty credit risk and reduce systemic risk. To mitigate these credit risks efficiently and robustly, we will interpose ourselves 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. We intend to
using a state-of-the-art risk management framework, which complies with global best practices for mitigating settlement risk. Its risk-based additional collateral requirement will ensure that capital deployed by clearing members is always optimal.
The company intends to deploy a competitive low-cost clearing fee regime for members. The company has sufficient financial resources, including a settlement guarantee fund, to cover participants' risk exposures. Members will have access to a wide range of financial reports that equip them with extensive knowledge and enable them to make informed decisions.
Reiterating the company's aim, the Managing Director, Mr. Tapas Das, said: "NG Clearing shall be playing a key role in the financial market ecosystem in the region, upholding stability and safety of the marketplace, through an 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".
NG Clearing is Nigeria's first CCP, providing the Clearing & Settlement of Exchange-traded derivative instruments in the Nigerian Capital Market.
NG Clearing is promoted by The Nigerian Stock Exchange and Central Securities Clearing System Plc along with key stakeholders like the Nigeria Sovereign Investment Authority, Access Bank Plc, Consonance Kuramo Special Opportunities I. Others include Coronation Merchant Bank Limited, Greenwich Trust Limited, Union Bank Plc, UBA Plc and Association of Securities Dealing Houses in Nigeria.