Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC) has urged commodities exchanges to build robust investors’ protection at the centre of their operations in a bid to gain investors’ confidence and attract more investors.
Director General, Securities and Exchange Commission (SEC), Mr. Lamido Yuguda gave the charge during the presentation of Eko Gold Coins to SEC by the Lagos Futures and Commodities Exchange (LCFE) yesterday in Abuja.
Yuguda urged the LCFE and the entire value chain to always have investor protection at the core of their work because eventually this is what will make the product succeed.
“Now 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 products.
“The derivatives products are built around the product itself. We must have investor protection at heart because if it is taken off and investors have confidence that anytime I want to sell this investment am actually likely to get more than I put in which is the true meaning of investment,” Yuguda said.
He noted that when people invest, they are postponing current consumption for future consumption, need to be paid some returns as a price for that postponement of current consumption.
“So 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.
“So when we do things we have investor protection and investor interest at heart, you find out that you create a product, everything you are doing tells you this is the direction I am going. So when you see that product deviating, you go back to the drawing table and say I must make sure that investors make money out of this. If we do that the sky is the limit for this product, that you have demonstrated today,” Yuguda said.
He commended the LCFE on the demonstration and presentation and assured them of the commission’s support in the development of the product and in the efforts to enlighten both the market participants and the investors who will put in their money.
“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.
“When the price of gold moves in Dubai, the people in Zamfara state they know, people in Lagos state they know and ladies who have gold, and every time they take the gold to the market the gold dealers are actually prepared to buy. This is one product that does not get old, the older the better, because you buy at a cheap price and selling at a much higher price. So this is something that we truly want to support,” Yuguda said.
Chairman, Lagos Commodities and Futures Exchange, Chief Onyewenchukwu Ezeagu said that the core vision of setting up LCFE was to provide a viable structure that will transform the Nigerian commodities market and redefine practice standards which would catalyse economic growth in Nigeria.
He said with support of SEC, the novel foundation has been laid and gradually the commodities ecosystem is being reformed and transformed with development of innovative products and fungible Instruments that are being introduced into the Market.
“One of such products developed by LCFE, “The Eko Gold Coin” is why we have come to pay the ommission this visit today. On July 28, 2022, the Lagos Commodities and Futures Exchange was commissioned by the Executive Governor of Lagos State, His Excellency, Mr. Babajide Olusola Sanwo-Olu 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 my 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. Director General Sir, as the saying goes: ”No one lights a lamp and put it in a secret place; rather it is set on a lampstand, where it gives light to all in the house” Ezeagu said.
He added that the exchange wishes to propagate the information about this novel achievement market-wide, with the adequate assistance and support of the SEC and commended the SEC Management on its unreserved support adding “together we will build a thriving and enduring commodities ecosystem in Nigeria.