Barclays Bank Becomes 6Th To Be Listed At NEXT By NSE

By Juma / Published December 30, 2019 | 8:00 am

Last week, the Nairobi Securities Exchange announced the listing of Barclays Bank of Kenya’s (BBK) single stock futures to the derivatives market, NEXT.

Barclays Bank will be the sixth single stock listed at Next after Safaricom, KCB Group, Equity Bank, KenGen and EABL which all listed on the launch of the derivative market in July 2019.

Single stock futures are futures contracts where the underlying security is an equity stock listed on the NSE, where one commits to buy or sell single equity at a future date. These instruments give investors exposure to price movements on an underlying stock.

BBK’s investors will be required to pay an initial margin of 1,800.0 shillings for one contract resulting in exposure of 1,000 Barclays Bank Shares with the stocks having a three month expiry period from the day of trading.

According to the Capital Market Soundness Report Q3’2019, 349 contracts, worth 12.8 million shillings were traded during the quarter under review with a majority of liquidity concentrated around Safaricom and banking counters, mainly KCB Group and Equity Bank.

Safaricom accounted for 55.0 percent of the market’s turnover while KCB accounted for 18.0 percent followed by NSE 25 index at 17.0 percent while Equity Bank stood at 8.0 percent during the quarter.

In Q4’2019, 148 contracts, worth Kshs 7.1 mn, have been traded so far in the derivatives market, a 57.6 percent decline from the 349 recorded in Q3’2019 taking the total number of contracts traded in the derivatives market since inception to 497, with a total value of 19.9 million shillings.

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The NEXT derivatives market is expected to provide new opportunities to investors enabling them to diversify, manage risk and allocate capital efficiently. However, it still remains extremely small.

“We believe increasing the number of single stock futures traded on the derivatives market will be beneficial in further opening Kenya’s financial markets to domestic and international investors, which will, in turn, positively influence the performance of the economy.

Thus, we recommend that the following should be taken into consideration,” said

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About Juma

Juma is an enthusiastic journalist who believes that journalism has power to change the world either negatively or positively depending on how one uses it.(020) 528 0222 or Email: info@sokodirectory.com

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