Developing a derivative securities market in Ghana: requisite conditions

The development of a derivative securities market in Ghana was studied with the focus on the requisite conditions which form a foundation upon which a successful derivatives market would thrive. The study addressed the availability of participants, the presence or absence of a legal regulatory framework and the possibility of developing a derivatives market. The importance of this study is to provide a platform for which business could unbundle and redistribute risk through hedging, allow for price discovery and increase the inflow of global resources into Ghana. The researcher used SPSS 16.0 software for windows in analyzing the quantitative data on the level of awareness of derivative instruments, the possibility of developing a derivative market in Ghana, organizations currently involved in any form of derivative trading and number of derivative contracts traded. The qualitative data collated through interview was analyzed using content analysis. Themes and keywords from the interview were isolated and described. The study found that Ghana is ready for the development of a derivatives market but lacks the needed legal and regulatory framework for derivatives trading. It is recommended that policy makers should pass the law allowing the development of a derivatives market. With effective investor education, Ghana could start gradually probably with the establishment of a commodity exchange since the economy is commodity based.
Thesis submitted to the Department of Business Administration, Ashesi University College, in partial fulfillment of Bachelor of Science degree in Business Administration, April 2010
Ghana, derivatives, market