Traders on the Nairobi Securities Exchange (NSE) will enter 2026 with a new instrument to manage sector-specific risk, as the exchange announces the launch of an NSE Banking Sector Index (NBSI) future alongside a comprehensive reset of initial margin requirements across its derivatives board.
- •The new contract, set to list on 19 December 2025, provides a consolidated tool for hedging exposure to Kenya’s banking sector.
- •Historically, market participants have relied on a basket of single-stock futures to construct similar hedges.
- •The sector index future is designed to streamline this process, offering a single reference point for institutions active in one of the market’s most liquid segments.
The cash-settled future will track the NSE Banking Sector Index and trade with quarterly expiries in March, June, September, and December. Contracts will expire at 1500 hours Kenyan Time on the third Thursday of the expiry month. Each index point carries a notional value of KES 10.00 and daily mark-to-market will be based on the volume-weighted average price (VWAP) for liquid positions, with a theoretical pricing model applied to illiquid ones. Total fees for the contract are 0.14% of the notional value.
The introduction of the new future coincides with a broad review of risk parameters. Effective 19 December 2025, updated initial margins will apply to major single-stock and index futures. The table below details the new margin for the Banking Sector Index future and highlights notable changes for key existing contracts since the last review.
| Contract / Index | Change for Mar-26 | Change for Jun-26 | Change for Sep-26 |
|---|---|---|---|
| NSE Banking Sector Index (NBSI) | KES 100 | KES 100 | KES 125 |
| KCB Group Plc (KCBG) | +125 | +125 | +100 |
| Equity Group Holdings Plc (EQTY) | +75 | +100 | +100 |
| NCBA Group Plc (NCBA) | +150 | +175 | +175 |
| Safaricom Plc (SCOM) | 0 | 0 | +25 |
| NSE 25 Share Index (N251) | +1,200 | +1,600 | +2,000 |
| Kenya Power & Lighting Co (KPLC) | +175 | +200 | +200 |
| East African Breweries Ltd (EABL) | -75 | -75 | -75 |
| Standard Chartered Bank (SCBK) | -25 | -25 | -50 |
| Liberty Kenya Holdings (LBTY) | -25 | 0 | -25 |
Note: Figures represent the change in initial margin in KSh since the last review, except for the NBSI, which shows the new absolute margin.
Clients with open positions in the March, June, and September 2026 contract cycles will see their margin accounts adjusted to reflect the new rates. This will result in either a requirement to top up collateral or an initial margin refund, depending on the direction of the change for their specific holdings.
The dual move by the NSE signals an effort to deepen liquidity and enhance price discovery in the derivatives market. By providing a dedicated sector hedge, the exchange is catering to institutional demand for more sophisticated risk-management tools. Concurrently, the margin reset aligns risk parameters more closely with current market volatility, promoting a more robust and consistent risk framework.
