Photo: Yinka Edu
The Capital Market Solicitors Association (CMSA) on Wednesday said that the adoption of trading in derivatives remained a critical tool in the revival of the nation’s economy through agriculture.
Mrs Yinka Edu, the association’s chairperson, told the News Agency of Nigeria on the sideline of Nigerian Structured Products Summit, themed: “Derivatives and Other Financial Instruments,’’ in Lagos.
Derivatives are financial contracts that derive their value from an underlying asset like stocks, indices, commodities, currencies, exchange rates, or the rate of interest.
According to her, the event is aimed at increasing public awareness on the advantages and opportunities available in the derivatives market.
She said: “There are ways it (derivatives) will have an impact in the common man because it manages risks and there is risk in everything that will do.
“It’s going to be important in agriculture; we are hoping that derivatives of various agricultural products will also be traded.
“So from the point of view of a farmer, if they are able to get their goods to a warehouse they will be able to trade derivatives of those products.
“So they would be trading an instrument that represents, say, their cocoa that they have in their warehouse so they will be able to use these to trade cocoa and that will affect price, aid price discovery.
“So that is the idea; we hoping derivatives will have an impact on the whole economy.’’
She, however, observed that though banks and some cooperate organisations currently engage in derivatives transactions, more effort is still required for listed exchange traded derivatives.
The event was organised in partnership with the International Swaps and Derivatives Association and ABA Section of International Law.