Nairobi Securities Exchange (NSE) has listed Barclays Bank of Kenya single-stock futures to its derivatives market, NEXT.
Barclays Bank which is transitioning to ABSA will be the sixth single stock listed at Next after Safaricom, KCB Group, Equity Bank, KenGen and EABL.
The latter all listed on the launch of the derivative market in July 2019.
“Following a review of the NSE 25 share index constituent counters, and in accordance with the single stock future eligibility criteria, the exchange wishes to inform of the listing of Barclays Bank of Kenya Limited single-stock futures contracts,” said the NSE in a statement.
BBK’s investors will be required to pay an initial margin of Kshs 1,800.0 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.
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.
All futures contracts listed on Next will have quarterly expiry dates: the third Thursday of March, June, September, and December of every year.
According to the Capital Market Soundness Report Q3’2019, 349 contracts, worth Ksh12.8 million, 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% of the market’s turnover while KCB accounted for 18.0%, followed by NSE 25 index at 17.0% while Equity Bank stood at 8.0%, during the quarter.
In Q4’2019, 148 contracts, worth Kshs 7.1 million, have been traded so far in the derivatives market, a 57.6% 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 Ksh 19.9 million.
The NEXT derivatives market is expected to provide new opportunities to investors enabling them to diversify, manage risk and allocate capital efficiently.