Two Nigerian CCPs have recently obtained an approval-in-principle from the Securities and Exchange Commission (SEC) in order to operate within the Nigerian market. The Nigerian Stock Exchange (NSE) has obtained approval for its central counterparty clearing house (CCP), NG Clearing Limited; and, FMDQ Clear (a subsidiary of FMDQ Group) has also been granted the approval.
As a result, the two CCPs will play a pivotal role for Nigeria as they will ensure safety and resilience in the local financial market, subsequently reducing systemic risk by interposing themselves between the buyers and sellers in the marketplace.
The Board Chairman of NG Clearing Limited, Mr. Oscar N. Onyema, stated, “Our 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 in an efficient and robust manner, 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 deliver an unparalleled CCP experience for the Nigerian financial market.”
A statement from FMDQ states: “FMDQ Clear, Nigeria’s first Central Clearing House, landmarks as Nigeria’s Premier Central Counterparty, as the Security and Exchange Commission grants Approval-in-Principle for Central Counterparty Registration”
Both CCPs will enhance the resilience of the Nigerian economy as critical Financial Market Infrastructures by aggregating and consolidating counterparty risk. With the introduction of a variety of permissible products that can be developed and offered by the CCPs, this will prove positive for the Nigerian financial ecosystem.
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