The Nairobi Securities Exchange (NSE) will introduce a new financial instrument on December 19, 2025, unveiling the Banking Sector Index Future in a move designed to deepen Kenya’s derivatives market and offer investors targeted exposure to the country’s listed banks.
According to specifications released on Monday by the exchange, the new product will be classified under the Index Future category and will be based on the NSE Banking Sector Index, which tracks the performance of all banking counters listed on the bourse. The exchange has assigned the system code “Mar26 NBSI” to the contract.
The NSE said the Banking Sector Index Future will trade on a quarterly cycle, with contract months set for March, June, September, and December.
The exchange added that expiry will occur on the third Thursday of the expiry month, noting that “if the expiry date is a public holiday then the previous business day will be used.”
The product will expire at 1500 hours Kenyan time.
The new derivative will be cash settled in Kenya shillings, in line with the settlement framework applied across the existing NSE derivatives platform.
To determine daily settlement values, the exchange said the mark-to-market methodology will be based on the volume weighted average price (VWAP) for contracts deemed liquid.
For contracts that are considered illiquid, the NSE will rely on “the theoretical price (spot + cost of carry)” to compute settlement values.
Each point on the index will be assigned a monetary value to standardize contract pricing and exposure.
The exchange noted that one index point equals ten Kenyan shillings (Sh10.00),” a pricing structure meant to keep the product accessible to a wide range of traders. Minimum price movement will also be set at Sh10 per index point.
Margin requirements will follow the bourse’s established risk management procedures.
According to the specifications, initial margin requirements will be as determined by the NSE Initial Margin Methodology, allowing the exchange to adjust collateral demands based on volatility, liquidity and market conditions.
The contract will be available for trading during the NSE’s standard derivatives window.
The exchange stated that market hours will run from 0900hrs to 1500hrs local Kenyan time, giving traders a six-hour window to execute, hedge or unwind positions.
The NSE also released a detailed breakdown of the transaction fees applicable to the new index future, noting that charges will total 0.14 percent of the notional value traded.
According to the fee schedule, Trading Members will earn 0.08 percent, while Clearing Members and the NSE itself will each receive 0.02 percent.
The Investor Protection Fund (IPF) Levy and Capital Markets Authority (CMA) fee will each stand at 0.01 percent.
“The percentages indicated above will be used to calculate the fees based on the notional contract value,” the exchange stated.
The new contract adds another instrument to the NSE Derivatives Market, giving institutional and retail investors a tool to hedge sector-specific exposure or take directional positions on the performance of Kenya’s banking sector.
While the exchange’s statement did not comment on the expected market impact, the structure and specifications suggest a product designed to expand hedging options and strengthen risk management within the financial ecosystem.
With its launch set for December 19, 2025, the NSE Banking Sector Index Future marks another step in the exchange’s ongoing efforts to broaden Kenya’s derivatives offering while aligning local market infrastructure with global trading standards.
