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By Chinenye Anuforo
As part of the final preparation for the commencement of operation of the Lagos Commodity and Futures Exchange, Association of Stockbroking Houses of Nigeria (ASHON) has sealed strategic relationship with the Central Securities Clearing System (CSCS) Plc.
Besides, the CSCS has confirmed its readiness for clearing and settlement of transactions on commodities and futures.
A commodity exchange is an exchange where various commodities and derivatives products are traded. Most commodity markets across the world trade in agricultural products and other raw materials (like wheat, barley, sugar, maize, cotton, cocoa, coffee, milkproducts, pork bellies, oil, metals, etc.) and contracts based on them. These contracts can include spot prices, forwards, futures and options on futures. Other sophisticated products may include interest rates, environmental instruments, swaps, or ocean freight contracts.
Commenting on the new business relationship between ASHON and CSCS the Acting Chief Executive Officer of Lagos Commodity and Futures Exchange, Mr Akin Akeredolu-Ale explained that Infrastructure for trading, clearing and settlement of transaction were fundamental to the success of any Commodity Exchange and indeed remains real challenge that must be addressed at every point.
According to him, ASHON and CSCS are well positioned to ensure seamless take-off of the new Commodity and Futures Exchange.
“The memorandum of understanding signed by ASHON and CSCS is the key heartbeat of the setting up a commodity exchange. Basically in anywhere in the world some of the fundamental challenges in setting-up a commodity exchange are the issues of trading, clearing, settlement and electronic receipts.
“The good thing is that our Central Securities Clearing System has the infrastructure to do that. It has capacity for people to trade on commodities and settle commodities.
The CSCS is well positioned to handle all aspects of our transactions on commodity and futures.
“Apart from the trading aspect the link between the traders and the clearing members and the interbank settlement would run through the CSCS,” he said.
Corroborating Akeredolu-Ale, the Chief Executive Officer, CSCS Mr. Haruna Jalo-Waziri confirmed that the clearing house had always been associated with the state-of – the art technology for clearing and settlement of transactions.
Jalo-Waziri expressed optimism that by the Memorandum of Understanding signed with the Commodity Exchange, the Clearing House was ready to handle all its clearing and settlement.
Commenting on the strategic relationship, ASHON’s Chairman, Mr. Patrick Ezeagu explained that without an effective depository a commodity exchange could not function.
