The Nairobi Securities Exchange (NSE) became an associate member of the Association of Futures Markets (AFM). The Association promotes and encourages the establishment of new derivative and related markets and organizes international conferences to promote communication, transfer of information and experiences among members.
Speaking during the 16th Annual AFM conference in Johannesburg, South Africa, Mr. Peter Mwangi the Chief Executive of NSE stated,” We are elated at joining the Association of Futures Markets as it the industry trade association, supporting members and particularly, emerging and frontier markets, in the establishment of derivative and futures markets, according to international best practise.”
Derivatives can be used either for risk management (i.e. to “hedge” by providing offsetting compensation in case of an undesired event, “insurance”) or for speculation (i.e. making a financial “bet”).
The establishment of a derivatives market in Kenya will enable Kenyan corporate and individuals to manage risk such as fluctuating produce prices, currencies and interest rates more effectively.