The Lagos Commodities and Futures Exchange (LCFE) has restated its commitment to advocacy as a strategy to create awareness on how the commodities exchange can grow the nation’s Gross Domestic Products in 2022.
The Exchange, which commended the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC) on their roles in ensuring uptrend of activities in the Nigerian commodities ecosystem, noted the need to address the dearth of fungible instruments and put a proper risk management structure in place to activate trading in the ecosystem.
In an interactive session with the Capital Market Correspondents at the weekend, on “LCFE’s Journey so far and Outlook for 2022”, Managing Director and Chief Executive Officer, Akin Akeredolu-Ale explained that for commodities ecosystem to thrive and contribute to a country’s economic growth and development, instruments had to be created and rules and guidelines are being developed and approved.
“Nigeria must have a full structure in place for commodities exchanges to operate optimally. It is like a green field in Nigeria. A lot of participants are used to trading equity and fixed income securities. At LCFE, our outlook for 2022 is more on advocacy to encourage trading in this Ecosystem, particularly our teaming youth population. We have fungible instruments.
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“We have commenced proof of concept trade as preparation to full trade. Commodities contribute about 70 percent to Nigeria’s Gross Domestic Product (GDP). The industry generates 80 percent employment. The focus of foreign countries on Nigeria and Africa is commodities and most of the time not infrastructure.
“In 2022, we shall partner with the media to embark on aggressive financial literacy that involves schools, religious groups and other platforms. We shall engage SEC, Federal, State and Local Government Agencies. Our other areas of focus for development are non-Interest backed commodity instruments and other sources of finance instruments,” said Akeredolu-Ale. We have partnered with NG Clearing in other to trade derivatives.
He explained that LCFE was already working on guidelines and frameworks for commodities notes, listing of Exchange Traded Funds (ETF), cold chain and logistics investments, stakeholders’ engagement and strategic partnerships.
Earlier in his address, the Head of Operations, Allwell Umunnaehila pinpointed some of the milestones of LCFE within its short period of existence, including On-boarding of Dealing Member firms, settlement Banks, signing of Service Level Agreement (SLA) with NIBSS, and Collateral Managers, commencement of trades, setting up of rules for private and public listings, incorporation of Tradenet and Spurtech and VPN connectivity for dealing member firms.
LCFE’s Management interactive session with the financial press, is the first in the series of the Exchange’s Annual Review of Operations and outlook for the new year.
