Capital FM (Nairobi)

31 January 2013

East Africa: Expert Engaged to Set Up Futures Exchange

Nairobi — The Capital Markets Authority (CMA) has appointed a long-term Futures and Derivatives expert Assim Jang to provide technical assistance in the development of the long-awaited Futures Exchange, the first in East Africa.

A futures exchange works by way of having a contract to buy specific quantities of a commodity or financial instrument at a particular price, with delivery set at a specified time in the future.

These types of contracts fall into the category of derivatives such as energy, mineral or agricultural produce and they aim to cushion consumers from price volatilities in the market.

The establishment of a futures exchange would benefit all sectors of the economy by addressing the current volatility of prices of commodities that would be traded in the Futures Exchange.

The expert has over 30 years of varied and progressive work experience in commercial and investment banking, stock brokerage firms, commodity futures exchange and high-tech venture capital in the UK, USA and Pakistan.

Most recently, he was the founding Managing Director of the National Commodity Exchange Limited, Pakistan's first all-electronic commodity futures exchange, and is credited with setting up the entire Exchange from ground zero including introducing and implementing volatility-based risk management systems, processes and procedures, and the Central Counterparty Clearing model in Pakistan.

The authority has negotiated a one-year contract with Jang who will engage with various stakeholders including the senior officials of the Ministries of Finance, Trade, Environment and Mineral Resources, Energy, Agriculture, Central Bank of Kenya, among other financial intermediaries and relevant stakeholders in charting a clear way forward for the launch of Futures contracts during his one year consultancy.

In the course of the consultancy, he will be expected to provide leadership in helping the authority to develop and issue regulatory requirements on approval of rules and by-laws for Futures exchanges.

Working with the authority, the Futures Exchange and other stakeholders, the expert will also assist in establishing the link between spot and futures market by facilitating the development of a robust warehouse receipting infrastructure.

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