Nigeria: NG Clearing Limited Gets SEC's Approval to Operate

16 June 2021

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 June 7, 2021. This registration now permits NG Clearing to clear and settle exchange traded derivative products - making NG Clearing the first CCP in Nigeria.

Speaking on the issuance of the licence, the Chairman of NG Clearing, Mr. Oscar Onyema, said: "NG Clearing will deliver an unparalleled CCP experience for the Nigerian financial and capital marketsand 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 byinterposing 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.

Also commenting, 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."

According to Das, 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.

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