• BRVM plans first ETFs and derivatives on UEMOA market
• Delegation visits Nigeria’s NGX to learn from its experience
• Move aims to boost liquidity, diversification, regional market integration

West Africa’s regional stock exchange, the BRVM, plans to introduce exchange-traded funds (ETFs) and derivatives on the UEMOA regional financial market for the first time.

As part of this effort, a delegation led by BRVM Director General Dr. Edoh Kossi Amenounve visited the Nigerian Exchange Group (NGX Group) on Thursday, April 2, to draw on its experience with these instruments.

“The visit aimed to draw on the Nigerian Exchange’s experience in derivatives and ETFs ahead of their planned launch on the UEMOA regional market,” the BRVM said on Facebook.

An ETF is a listed investment fund that tracks an index. Buying a single ETF gives investors exposure to multiple companies, enabling diversification, lowering risk and reducing costs compared with traditional funds. A derivative is a financial instrument whose value is based on an underlying asset such as a stock, commodity, currency or index. It can be used to speculate, hedge risk or gain market exposure with limited upfront capital.

Lessons from Nigeria

Discussions with NGX focused on the requirements for launching ETFs and derivatives on the BRVM. NGX shared its experience on technology choices, product selection — including futures or options on indices, individual stocks or commodities such as gold — and market infrastructure. Talks also covered the establishment of a clearing house and the role of liquidity providers.

Nigeria’s market includes 12 listed ETFs, including one backed by gold, and four derivatives products: two linked to the NGX 30 index, which tracks the exchange’s 30 largest and most liquid companies, and two tied to the NGX Pension Index, which includes stocks eligible for pension fund investment. NGX is Africa’s third-largest exchange, with 156 listed companies and a market capitalization of about $99 billion.

A significant development for the regional market

The planned introduction of ETFs and derivatives on the BRVM marks a step forward for the regional financial market. It is expected to broaden the investor base and boost trading volumes, bringing the exchange closer to practices already established on other markets, including NGX.

The initiative could also drive growth in asset management and market operations, while strengthening the BRVM’s role in the regional financial system and supporting integration within UEMOA. Its success, however, will depend on the establishment of a robust operational and regulatory framework to ensure smooth market functioning and effective participation by all stakeholders.

Chamberline Moko