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NG Clearing Limited becomes Nigeria’s Premier Central Counterparty

Nigeria’s apex capital market regulator, the Securities and Exchange Commission (SEC) has granted NG Clearing Limited (NG Clearing) registration to perform the function of a central counterparty (CCP) with effect from 7th June 2021. This registration now permits NG Clearing to clear and settle Exchange traded derivative products – making NG Clearing the first CCP in Nigeria.

NG Clearing – Nigeria’s premier CCP – was incorporated on May 24, 2016 to facilitate derivatives trading in the Nigerian Capital Market. The company  is promoted by the Nigerian Exchange Group Plc and Central Securities Clearing System Plc (CSCS) along with key stakeholders including Nigeria Sovereign Investment Authority (NSIA), Access Bank Plc, Consonance Kuramo Special Opportunities Fund I, Coronation Merchant Bank Limited, Greenwich Merchant Bank Limited, Union Bank of Nigeria Plc (Union Bank), United Bank for Africa Plc (UBA) and Association of Securities Dealing Houses of Nigeria (ASHON).

Speaking on the issuance of the license, the Chairman of NG Clearing, Mr. Oscar Onyema, OON said “NG Clearing will deliver an unparalleled CCP experience for the Nigerian financial and capital markets and will optimize the deployment of its resources to achieve long-term value creation for its stakeholders using a state-of-the-art risk management framework, which complies with global best practices for mitigating settlement risk”.

He added that the company’s main role is to improve the soundness and safety of the Nigerian financial market by delivering best-in-class post-trade services that manage counterparty credit risk and reduce systemic risk by interposing itself 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.

The Managing Director of NG Clearing, 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 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.”

Mr. Das stated that the company has sufficient financial resources, including settlement guarantee fund, to cover participants’ risk exposures. He noted that members will have access to a wide range of financial reports that equip them with extensive knowledge and enable them make informed decisions, as well as access to NG Clearing’s bespoke clearing and settlement software application which will support the clearing and settlement of derivative instruments across various asset classes i.e., futures and options contracts on  indices, equity shares, commodities, currency, rates etc.