The Lagos Commodities and Futures Exchange (LCFE) on Thursday in Abuja presented ‘Eko Gold Coins’ to the management of the Securities and Exchange Commission (SEC), in an initiative believed would help drive confidence, structure the gold market and deepen the commodity ecosystem
Eko Gold Coin was created out of the need to have an alternative asset class that investors can invest in apart from equities and fixed income instruments. Each of the coins is 24carat, weighing 50grams with 99.99% purity.
At the event where Paddy Rice Spots and Forwards Contracts was also presented, Patrick Ezeagu, board chairman, LCFE said that the commodities ecosystem was being reformed and transformed with the development of innovative products and fungible Instruments that are being introduced into the Market.
According to him, one of such innovative products developed by LCFE is the “The Eko Gold Coin” which, he commended the SEC for helping to drive.
He further explained that the core vision of setting up LCFE was to provide a viable structure that would transform the Nigerian commodities market and redefine practice standards which would catalyse economic growth in Nigeria.
He recalled that the LCFE was commissioned by the Lagos State governor, Babajide Sanwo-Olu in July 2022 with the momentous launch and unveiling of the first physical gold asset tradeable on a Commodities Exchange in Nigeria, “The Eko Gold Coin”.
“It is greatest honour and elation to present the first tranche of this exclusive gold coins which is available for purchase at LCFE to you and your esteemed team at the Commission,” Ezeagu stressed at the meeting which also had officials of SEC, LCFE, Sterling bank, Central Securities and Clearing Services, the merchants, among other stakeholders present.
He noted that the Exchange has committed to propagating information about this novel achievement in the wider market, with the adequate assistance and support of SEC, as “there is no better place to start than the corridors of policy makers and entities that are at the helm of managing national affairs.”
He further appealed to Lamido Yuguda, director general of SEC, to lead a delegation of the Commission, Management of LCFE and its project partners, to present the Coin to the National Assembly, Ministry of Finance, Ministry of Mines and Steel Development, National Pension Commission, Debt Management Office, and the Central Bank of Nigeria.
In his remarks, Olugbenga Awe who is the group Head, Agric Finance & Solid Minerals, Sterling Alternative Finance (SAF) – the Non-interest arm of Sterling Bank Plc – noted the bank’s excitement at being part of the Eko Gold Coin innovation, which he commended the LCFE for championing.
“It is important to take it to the market to drive awareness and ensure participation,” Awe noted, adding that the visit to Securities and Exchange Commission was to present the coins to them as the apex regulator of the capital market.”
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According to him, Sterling Bank partnered with IAC Global Investment Limited to aggregate the gold, refined and minted it to acceptable trading instrument.
Sterling Bank is also the settlement bank for gold trading in addition to provision of vaulting services, he said.
On how the initiative would benefit the market and the economy, Awe explained that “Gold is a natural hedge against inflation and in an inflationary period we are currently in, it provides a haven for investors.”
According to him, whilst “most investments have suffered losses, gold has outperformed most market instruments compared to fixed income investments that have been ravaged by inflation.”
Responding, SEC DG, Lamido Yuguda said he was impressed with the innovation, but urged commodities exchanges in the country to have investor protection at the centre of their operations in a bid improve confidence and attract more investments, noting more importantly that “this is what will make the product succeed.”
“The gold itself has great value, once you put out your money and buy it, you have value, that is incontrovertible, but, where we need to be careful is the associated investment product, the derivatives,” Yuguda stated.
“The derivatives products are built around the product itself. We must have investor protection at heart because they need to have confidence that anytime they want to sell this investment, they’ll actually likely to get more than they put in which is the true meaning of investment.”
The SEC DG further explained that when people invest, they are postponing current consumption for future consumption, and need to be paid some returns as a price for that postponement of current consumption.
According to him, “When you sell this product in the future and make gain, you are actually being rewarded, but when you sell the product in the future and you make a loss, you are making two losses. One you are postponing current consumption and two you have not recovered your principal in the future. When people do that, as it happened in the stock market in 2008, you find out that the investor confidence wanes,” he advised.
Yuguda commended the LCFE on the demonstration and presentation of the coin and assured them of the Commission’s support in the development of the product and assistance in the efforts to enlighten both the market participants and the investors.
“I wish you all the best in this market and whatever the SEC can do to support the development of this gold market, we will do. This is an important consideration because this is something that has a dual use. You can use gold as store of value, i.e monetary gold or as jewelry.”
“This is one product that does not get old, because you buy at a cheap price and sell at a much higher price. So this is something that we truly want to support” he stated.
Babangida Yahaya, Head, Depository Services, Central Securities and Clearing (CSCS) described the Eko Gold Coin as a novel idea which is already gaining traction in the market.
Yahaya who represented Jalo Waziri, Managing Director, CSCS at the event spoke about the collaboration brought into the initiative, led by SEC, pointing out that so much could be unlocked in the market if this level of collaboration is sustained.
