Here are answers to some frequent questions.

1. What is the role of NG Clearing and how is it different from a Clearing House?

NG Clearing is a market infrastructure that ensures market safety and market integrity, thereby enhancing the efficiency of the capital market. It achieves this objective by interposing itself between counterparties to a trade by acting as the buyer to every seller and the seller to every buyer (through a process of novation), thereby guaranteeing the performance of trades. It is different from a Clearing House because its functions go beyond that of a Clearing House by managing counterparty credit risk. This means that a Clearing House does not take counterparty risk, it only establishes positions, calculates net obligations, and ensures settlement obligations are fulfilled.

2. What are the major functions of NG Clearing and how does it fit into the Nigerian Capital Market?
  • The functions of NG Clearing include:

    • Clearing and Settlement of Exchange Traded Contracts (from Approved Trading Venues)
    • Risk Management
    • Collateral Management


    The functions performed by NG Clearing fit into the Nigerian Capital Market Masterplan[1]. The establishment of NG Clearing supports the growth and development of the Nigerian capital market as the "gateway to African markets", and positions the Nigerian capital market as a leader amongst emerging markets by facilitating greater market transparency, increased trade volumes and overall improvement of the efficiency of the Nigerian capital market. The presence of NG Clearing as a CCP will increase the robustness of the Nigerian capital market through best-in-class post-trade services that manage counterparty credit risk and mitigate systemic risk in the Nigerian financial system. 

    [1] See SEC 10-year Master Plan -

3. How is the role of NG Clearing different from the role of Central Securities Depository?
  1. A Central Securities Depository (CSD) and CCP are both Financial Market Infrastructures.. A CSD is typically licensed to operate as a depository and Securities Settlement System (SSS) while CCP clearing concentrates on position management, collateral and risk management, and delivery management while CSD clearing concentrates on validating and matching the delivery instructions, the result of which is forwarded to settlement. Both CSD and CCP perform Settlement and Clearing Services, but at different levels.
4. Who is a Clearing Member and what is its relationship with NG Clearing?
  1. A Clearing Member is a member of NG Clearing who has the responsibility of settling all trades executed by the Trading Members affiliated to its, on any approved Trading Venue. The Clearing Member also has obligations to NG Clearing, which could be financial or securities obligations, depending on whether the trades are to be financially settled or securities settled, i.e involving the transfer of securities.


    Clearing members acts on behalf of the clients (Trading Members) by dealing directly with NG Clearing on their clearing and settlement obligations as stated below:

    • NG Clearing requests for Margin deposits based on open contracts held by the Clearing Members;
    • Clearing Members are obligated to provide Margin deposits to NG Clearing on a daily basis in the form of Variation Margin and Initial Margin.
5. What are the categories of Clearing Members?
  1. There are three (3) categories of Clearing Membership with NG Clearing. They are:

    • General Clearing Member (“GCM”): A Clearing Member that clears trades on its own behalf and/or in respect of its clients. The GCM is required to perform all obligations (margins, settlement obligations, etc.) registered in its account and those of its clients, irrespective of whether the client has complied with its obligations.
    • Professional Clearing Member (“PCM”): A Clearing Member that is permitted to clear transactions or contracts only in respect of clients. PCMs are responsible for the fulfillment of their clients’ obligations (margins, settlement obligations, etc.)
    • Self-Clearing Member: A Clearing Member that is permitted to clear transactions or contracts on its own behalf. SCMs are responsible for the fulfillment of all the obligations (margins, settlement obligations, etc.) arising out of trades executed and cleared by them.

    For Clearing Member eligibility requirements, this is explicitly stated on NG Clearing’s website.[1]

    [1] See the website link here -

6. How are Clearing Members different from Trading Members and Clients?

Clearing Members are members of NG Clearing while Trading Members are brokers who have been licensed or accredited by an Exchange to trade on the Exchange’s platform. Thus, Trading Members are the Trading Licence Holders of an Exchange. Clients are the ultimate investors who engage in transactions through the Trading Members.

7. Can NG Clearing clear trades from more than one exchange?

NG Clearing is designed to support multiple Exchanges, multiple asset classes, and multiple segments. For Trading Members (TM) who are members of multiple Exchanges, the TM is only required to register their unique identifier for each of the Exchanges through their Clearing Members. However, obligations across each trading venue shall be treated separately and not netted across multiple trading venues.

8. Will Clearing Members be required to pay annual membership fees?

All Clearing Members are required to pay an annual membership fee. The fee is charged on a pro-rata basis (calculated from the admission date to the end of the financial year) and payable before the admission date.

9. Will Clearing Members be required to pay onboarding fees?

All Clearing Members are required to pay a one-off, non-risk-based application fee as stated in the table below. The application fee is a one-time fee charged after the prospective member's application has been approved in accordance with Rule 3 of the NG Clearing Rule book, as may be amended from time to time.

10. Can a client approach NG Clearing directly for account opening?

No, a Client has to approach a registered Trading Member/Broker. The list of registered Trading Members/Brokers can be found on the website of the relevant Exchange or trading venues.

11. How are accounts at NG Clearing structured?

NG Clearing maintains positions at the client level i.e., all positions are fully segregated at individual investor's names. Positions are rolled up to Trading Member level and lastly to Clearing Member level. Hence, a Clearing Member position is netted at client level and grossed across clients.

12. How can investors open a client account?
Investors are expected to approach their trading license holders (Trading Members) for account opening. Trading Members are required to open a CSCS account for investors and upload the same account number on the NG Clearing portal. Only valid CSCS account number/client code shall be accepted for trading.
13. Can a client maintain the same account number used in CSCS?

Yes, all clients are expected to maintain the same account number for the equity market and derivatives market.

14. Can an investor maintain a relationship with multiple Trading Members

Yes, investors can maintain multiple accounts with different Trading Members. The client will be required to post margins with each of the Trading Members to enable them to take positions with each member.

15. What product segment(s) will NG Clearing be clearing?

As a multi-asset clearing Company, NG Clearing facilitates efficient clearing across a wide array of asset classes and Exchanges. In the short term, NG Clearing will be clearing and settling the Equity Futures (Index and Single Stock) launched by NGX. NG Clearing has the capacity to clear across a wide array of asset classes (for Derivatives) and Exchanges.

16. How will the products (equity derivatives) be settled?

Equity Futures (Index and Single Stock) will be cash settled.

17. At what time is the Initial Margin paid?

Initial Margin is required to be paid prior to execution of an order. This will be paid by the Client to the Trading Member. The Trading Member will pay the Initial Margin to the Clearing Member, and this will ultimately be paid to NG Clearing as collateral.

18. How can investors determine the Initial Margin requirements for the exposure they are willing to take?
  1. The Initial margin payable for any security/contract shall be published by NG Clearing on T-1 day. An investor can also estimate the Initial Margin requirement with the Initial Margin Calculator on NG Clearing website.[1]

    [1] For the Initial Margin Calculator, Click here -


19. How is Initial Margin (IM) calculated?
  1. Initial Margin computation is based on Historical Value at Risk Approach (HVaR), including extreme market movements and crystalized losses and any other additional margin that would be requested by NG Clearing from time to time.

20. How are contracts netted?
  1. Client positions are netted at the level of individual client and grossed across all clients, at the Trading/ Clearing Member level, without any set-offs across clients. Proprietary positions are netted at Trading/ Clearing Member level without any set-offs between client and proprietary positions. The margins computed are also aggregated first at the Trading Member level and then aggregated at the Clearing Member level.

21. What collateral can be used to meet Initial Margin (e.g., Nigerian government bills/bonds?)? What are the haircuts applied to this collateral?
  1. Currently, cash is the acceptable form of collateral.

22. What role does a Clearing Member play in collateral management?
  1. Clearing Members are required to place a limit on the collateral deposited by the Trading Members. However, the percentage limit is based on the risk management procedure of the respective Clearing Member.

23. How will the collateral be maintained in NG Clearing’s books?
  1. Collaterals are maintained with Clearing Member in NG Clearing books.

24. Is it possible for a Clearing Member to request for a collateral release in any case of over-collateralization?
  1. Yes, the Clearing System’s view of the Clearing Member has the Collateral Release function. Note that the Collateral Release approval will be subject to availability of free cash which has not been blocked on account of exposure taken by the member.

24. Is it possible for a Clearing Member to request for a collateral release in any case of over-collateralization?
  1. Yes, the Clearing System’s view of the Clearing Member has the Collateral Release function. Note that the Collateral Release approval will be subject to availability of free cash which has not been blocked on account of exposure taken by the member.

25. How are collateral deposited?

The Collateral deposit for Initial Margin can be carried out via Bank deposit directly into NG Clearing’s account

26. How is Variation Margin calculated, and settled?
  1. Variation Margin (VM)  is calculated by ‘marking to market’ all open positions of the Clearing Member at the end of day (EoD), the sum of VM across Clearing Members is zero (0). The Variation Margin is settled via payment instruction to NIBSS payment platform daily on the transaction day, for cash credit or debit to the account of the respective Clearing Members with the CBN.

27. What is a Default Fund?
  1. Default Fund is a pool of funds established by a Central Counterparty (CCP), contributed by clearing members and the CCP to absorb the costs of clearing member non-performance if the failed clearing member's margin contributions and the CCP's first-loss contribution are exhausted. This is part of the Default Waterfall, in compliance with the CPMI IOSCO Principles.

28. How will the Trading Member default be handled?
  1. Collateral utilization of Trading Members will be monitored by NG Clearing on a continuously, once there is a total utilization of the Collateral, NG Clearing will notify the relevant Trading Venue (i.e., the Exchange) immediately and take appropriate actions to ensure there are no uncollateralized trades either by requesting that additional collateral should be provided or activating its default management procedures as may be required.

29. What is the relevance of stress testing and back testing in relation to default of Clearing Members?
  1. NG Clearing shall determine the amount of financial resources required to cover default and regularly test the sufficiency of this amount to cover default under extreme but plausible market conditions. (Stress Testing)


    NG Clearing uses back testing to compare the margin collected against a portfolio of positions to the actual losses at the end of the liquidation period, had a default occurred. Back testing identifies instances where margins collected have been inadequate, meaning that a portfolio has experienced a loss greater than the original margin collected.

30. Does NG Clearing have skin in the game?
  1. Yes, NGCL's makes contribution that is  linked to a percentage of the size of the default fund up to a certain percentage of its Capital.

31. What is the difference between membership deposit and default fund contribution?
  1. Membership deposit forms part of the Default Fund Contribution.

32. How is a Clearing Member default established?
  1. A default is established when a Clearing Member fails to fulfil its  margin call obligations and other financial obligations to NG Clearing