Oscar Onyema, chief executive officer of the Nigerian Stock Exchange says the bourse will list more exchange traded products in the market soon
By Anayo Ezugwu
The Nigerian Stock Exchange, NSE, is to list more Exchange Traded Products, ETPs, in the stock market. Oscar Onyema, chief executive officer, NSE, said the exchange “is focused on diversifying the ETPs space by supporting new product development and thus expects the launch of new ETPs in the short term.”
At the annual ETPs conference tagged: “Exchange Traded Products: Evolving investment themes, Accessing New Markets and Enhancing Portfolio Alpha,” in Lagos, Onyema said ETPs product issuers and intermediaries are to expand their footprint by broadening distribution channels. He encouraged them to introduce other asset classes/strategies, entering new markets, leveraging technology and data analytics to understand the market and demand.
Onyema, in his speech which was made available to Realnews, said NSE would expand the discourse on ETPs in terms of enhancing domestic capacity as well as improving collaboration amongst participants in the ecosystem – product strategists, issuers, intermediaries, advisers, investment managers and investors.
“ETPs are one of the most significant financial innovations in recent decades and have shaped the financial markets. Since the introduction of ETPs in 1993, they have gained widespread acceptance in most developed markets. Over the last 15 years, investors’ demand for ETPs (both retail and institutional) has grown remarkably, which in turn has led to a greater variety of products offered by ETP sponsors.
“Globally, ETPs have grown remarkably this year recording net flows of approximately $358 billion as at October 2018. According to ETFGI, the Global ETP industry had close to 15,000 ETPs listings on 71 exchanges with assets of about US$5 trillion cutting across 392 providers at the end of October 2018. It is interesting to note that equity-based ETPs make up 76.7 percent of global ETP listings whilst Fixed Income based ETPs represent 16.7 percent of listings, similar to the asset split in Nigeria.
“The cross-listing of ABSA’s Newgold ETF on the Nigerian Stock Exchange in December 2011, opened up the ETPs market. Since then, the ETPs space has grown steadily by a cumulative average growth rate of 8 percent over the last four years. Currently, there are nine ETPs listed on the Exchange – two thematic ETFs providing access to Pension-compliant and Shariah-compliant stocks, two broad equity market ETFs tracking the NSE 30 Index, three sector based ETFs, one commodity ETF, and one bond ETF tracking exposure to benchmark FGN Sovereign Bonds.
“The introduction of ETPs is one of the Exchange’s strategies to enhance diversification as well as broaden the options available in the capital market to support the efficient implementation of investment strategies across diverse asset classes and instruments. This year, in collaboration with issuers, we have focused on diversifying the ETPs space by supporting new product development and thus expect the launch of new ETPs in the short term,” he said.
Onyema said the conference provided insights on emerging themes as well as foster understanding of ETPs as convenient vehicles and investment management tools for accessing other markets. “Discussions sought to: identify solutions to challenges in the domestic market, as well as consider the potential for cross border listing of securities in Africa.
“Expand the dialogue regarding the integration of African Financial Markets via the issuance of ETP vehicles and Depository receipts. Provide the investment advisory and broker-dealer community with an understanding of their roles in distribution and capital mobilization, as well as provide direction to ETP issuers to support product development efforts in the medium term,” he said.
ETPs are type of security that is derivatively priced and trades intra-day on an exchange. They are priced so the value is derived from other investment instruments, such as a commodity, currency, share price or an interest rate.
– Dec. 7, 2018 @ 16:09 GMT |