After securing approval from the Securities and Exchange Commission (SEC), Nigeria’s capital market regulator, the Lagos Commodities and Futures Exchange (LCFE) is set to commence operations. This authorization, which took effect from June 14, 2019, follows the first approval-in-principle from the Commission.
By leveraging a wide array of talents, the new trading platform looks to operate as an influential brand and unlock its potential in the financial market. It is championed by the Lagos State Government and Association of Securities Dealing Houses of Nigeria (ASHON).
“Congratulations to the market, the operators and the economy. We are really grateful to SEC, shareholders, and all our partners-Nigerian Stock Exchange (NSE), Central Securities Clearing System (CSCS), technology providers and all others that collaboratively birthed this new baby,” ASHON Chairman, Chief Patrick Ezeagu said.
Being a well-developed commodities and futures market, LCFE will be trading on four broad ranges of assets which are agricultural commodities, currencies, solid minerals and oil and gas.
Opening up the commodities market ecosystem with LCFE is beneficial to the state and country in many ways. The new Exchange has the potential to unlock enormous wealth across the country and provides more opportunities for diversification for stockbrokers.
As revealed by The Nation, analysts are of the opinion that Nigeria’s capital market was long overdue for a thriving commodities exchange. The assertion is based on the ongoing volatility in the international oil market, as well as the federal government’s commitment to place the agricultural sector as the major income driver in the country.
A Commodity Exchange or Futures Market is an organized market for the purchase and sale of enforceable contracts to deliver a predetermined amount of a commodity (wheat, gold, crude oil, natural gas) or a financial instrument (Treasury bills, currencies) at a specific price on a specific date in the future. Such contracts are known as futures and are bought and sold by means of a competitive auction process on the commodity exchange.
In such markets, individuals, institutions, and sometimes governments transact with each other in commodities to hedge against price fluctuations, protect an investment position or to speculate on the possible directions of the underlying asset.
