An Analysis of the Derivatives Market Performance in Kenya: A Case of Nairobi Securities Exchange Derivatives Market

Abstract

The growth of the financial derivatives market has been identified as a significant channel to drive the overall growth of the capital market, and the development of capital market efficiency has been widely regarded as crucial. The performance of derivatives in Kenya has been fluctuating causing uncertainty in the market. The study analyzed the performance of the Nairobi Securities Exchange Derivatives Market in Kenya since its establishment in July 2019. The study draws on secondary data from the Capital Markets Authority and Nairobi Securities Exchange from July 2019 to December 2023. Descriptive statistics was adopted for data analysis with the help of SPSS software. Findings indicated that Safaricom Plc has been active and the best-performing company in trading single futures derivatives contracts at NEXT with the highest total turnover in Kenya shillings. The other companies that followed Safaricom closely were Equity Group Holdings and Kenya Commercial Bank. The overall performance of other companies in terms of derivatives contracts traded over the years has been fluctuating. Overall, the NEXT has made many strides in terms of derivatives trading in Kenya. The securities market regulators need to encourage all listed companies to participate in the Nairobi Securities Exchange Derivatives market to increase options available at the market and improve the Country’s economy.