A survey of the factors hindering the trading of financial derivatives in the Nairobi Stock Exchange (NSE)

Abstract

This study sought to establish the factors hindering the trading of financial derivatives in the NSE. To achieve this primary data was collected through a questionnaire. The questionnaire was administered to 19 brokerage member firms as per appendix two. Data was collected from 16 firms. From the study it was evident that the main factors hindering the trading of financial derivatives in the NSE are the infancy of the NSE market, lack of awareness about financial derivative products and the notion that it is an expensive risk management technique. The regulation and accounting complexities associated with financial derivatives, less developed political structures and government policies to ensure stability of financial systems and complexities in valuing financial derivatives were also cited to be some of the factors hindering the trading of the financial derivatives in the NSE.