Forex Derivatives Trading Coming to Nairobi Stock Exchange

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Forex Trading In Kenya

NSEOnline Forex Trading has been getting more and more popular in Kenya. In fact Forex Trading is rising so fast that it threatens to overshadow any other online venture in Kenya.  Many people are lured into Forex Trading to try and make quick money. It is something Kenyans have failed at miserably and Kenyans have been able to keep up with worldwide statistics where 95 % of new traders loose money. Forex trading is not as easy as it looks like and really it is not for everyone, especially the impatient and the fainthearted. Now Kenya is all set to join the Forex Futures Market with the introduction of a new product to the Nairobi Stock Exchange.

Currency Futures

A Currency Futures (CFs) Contract is an agreement that allows the investor the right to buy or sell and underlying currency at a fixed exchange rate at a specified date in the near future. One party to the agreement agrees to buy (longs) the Future at a specified exchange rate and the other agrees to sell (shorts) it at the expiry date. The principal instrument of a CFs Contract is the rate of exchange between one unit of foreign currency and the Kenya Shilling. Contracts will be cash settled in Shillings and no physical delivery of the foreign currency will take place.

Who is this for?

Investors, importers, exporters and travellers will use CFs to hedge themselves against movements in the exchange rate. Speculators use CFs to profit from short-term movements in prices. Other people can use them to profit from the price differences of similar products in different markets. Some investors trade CFs to boost the performance of a portfolio of assets over a period of time.

Forex Derivatives at the Nairobi Stock Exchange

The Nairobi Stock Exchange is East Africa’s largest financial trading platform. The NSE will be expanding its portfolio to offer forex futures. This will take currency trading to a whole new level. The new contracts will be introduced at the Nairobi Stock Exchange this year. The new contracts will give corporate firms and investors to hedge and manage currency exposure through online contracts.

The NSE will be only the second major exchange to offer forex derivatives to traders. The Johannesburg Stock Exchange was the first to introduce this type of a product in the region.

New currency futures will be trading against the Kenya Shilling at the NSE. This will support the Exchange’s international growth strategy as fund managers from all over will have a new opportunity to trade. Currency derivatives will be traded on an electronic platform. There are no limits and it’s open to both residents and non-residents. Already Kenyan firms and start ups have been attracting a lot of world-wide attention. MPESA a revolutionary mobile money transfer product was first introduced by Kenya.

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One thought on “Forex Derivatives Trading Coming to Nairobi Stock Exchange

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