The Nairobi Securities Exchange has issued new initial margin requirements for Futures trading on the exchange. In the notice to all NSE stakeholders, the NSE announced initial margin changes to futures contracts expiring on 18th June, 17th September and 17th December this year. The initial margin is the amount of money that is required to open a buy or sell position on the futures contract. The requirements take effect on Friday, 20th March.
Investors use futures contracts to hedge risk. A futures contract is a legal agreement to buy or sell a particular commodity asset, or security, at a predetermined price at a specified time in the future. Investors in futures at the NSE can trade stock futures in BAT, KCB Group, Equity Group, Safaricom, EABL and Absa.
British American Tobacco Kenya Plc futures have reduced initial margins for all 3 maturities; June, September and December. The June and December contracts reduced by Ksh. 200 while the September contracts got a Ksh. 150 reduction. The new initial margin for BAT futures expiring in June is Ksh. 7200 for the contract while those expiring in September and December will require an initial margin of Ksh. 7300
Investors in Equity futures will now have to part with Ksh. 6200 , Ksh. 6700 and Ksh. 7200 for the contracts maturing in June, September and December respectively while those investing in KCB futures will part with Ksh. 6200, Ksh. 6700 and Ksh. 7100 for the June, September, and December contracts respectively.
Initial margins for Safaricom reduced by Ksh. 100 for the June and September contracts while the initial margin for December contracts remained unchanged. The Initial margin requirement for Absa futures stayed the same at Ksh 2300, Ksh 2400 and Ksh 2500 for the contracts expiring June, September and December respectively.
In the notice, the NSE also informed Investors who have existing positions on the contracts expiring 18th June, 17th September and 17th December to top up their accounts to reflect the new rates while those with decrease in initial margins will receive refunds.
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