NEXT Single Stock Futures are derivative instruments that give investors exposure to price movements on an underlying stock. Parties agree to exchange a specified number of stocks in a company for a price agreed today (the futures price). NEXT Single Stock Futures will initially be cash settled.
NSE Derivatives Market | |||||||||||||||
Category of contract | Single Stock Future | ||||||||||||||
Underlying financial instrument | Single stock listed on the NSE E.g. Equity Group Holdings Plc. – EQTY | ||||||||||||||
System code | Jun19 EQTY | ||||||||||||||
Contract months | Quarterly (March, June, September and December). | ||||||||||||||
Expiry dates | Third Thursday of expiry month. (If the expiry date is a public holiday then the previous business day will be used.) | ||||||||||||||
Expiry times | 15H00 Kenyan time. | ||||||||||||||
Listing program | Quarterly | ||||||||||||||
Valuation method on expiry | Based on the volume weighted average price (VWAP) of the underlying instrument for liquid contracts, and the theoretical price (spot + cost of carry) for illiquid contracts. | ||||||||||||||
Settlement methodology | Cash settlement. | ||||||||||||||
Contract size | For shares trading below KES 100: One contract equals 1,000 underlying shares.
For shares trading above KES 100: One contract equals 100 underlying shares. | ||||||||||||||
Minimum price movement (Quote spread) |
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Initial Margin requirements | As determined by the NSE Methodology. | ||||||||||||||
Mark-to-market | Explicit daily. Based on the volume weighted average price (VWAP) of the underlying for liquid contracts, and the theoretical price (spot + cost of carry) for illiquid contracts. | ||||||||||||||
Market trading times | As determined by the NSE 09H30 to 15H00 Kenyan time | ||||||||||||||
Market fees
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The percentages indicated above will be used to calculate the fees based on the notional contract value. |
Benefits of trading NEXT Single Stock Futures
- Provide an effective and transparent hedge against unfavorable share price movements;
- They are liquid and easy to trade instruments;
- Positions in single stock futures allow investors to benefit from downwards or upwards movement of share prices; and
- Investors can have exposure on share price movements without owning the underlying share.