13 September 2017

Nigeria: Ezeagu - Stockbrokers Require New Skills for Commodity Trading

interview

The Association of Stockbroking Houses of Nigeria recently held a training workshop in conjunction with its technical consultants, Cella Private Group of India, preparatory to the establishment of the Commodity and Futures Exchange. Chairman of ASHON, Chief Patrick Ezeagu spoke to Goddy Egene on the programme and the need for stockbrokers to acquire new skills and competencies in order to operate optimally in the proposed trading environment. Excerpts:

What are the objectives of the training?

The core objective of the training was to equip the participants with the modern latest techniques of trading in commodities derivatives.

The fact of the matter is that our operating environment is changing and very fast too while our market is expanding steadily. We are famous with equity market. We moved to the bond market. We are now thinking about commodity market.

The best approach is to build capacity from within so that as these changes are taking place, our people can become fit and proper into the changing operating environment. By this, we shall be able to play our role as intermediary within the market space.

Therefore, this training which also dealt with derivatives and commodity is to ensure that we sharpen the skills of our members so that they will be able to trade in commodities, futures ,options and the rest of them . If we fail to build these capacities, that means they will remain in the dream land and will not be able to play the roles they are supposed to play. I must quickly place on record that the whole essence of the association is to ensure protection of the business of our members.

This involves ensuring that they comply with the fundamentals of Minimum Operating Standard (MOS) of the Nigerian Stock Exchange, compliance with all the rules, ethics, ethos and nuances that are set by the Securities and Exchange Commission (SEC) and The Nigerian Stock Exchange among others.

As a body, we also have an obligation to advise our regulators on how the market can move forward. In a similar vein, we are expected to be creative by introducing new products. We must consistently create awareness of the importance of the capital market locally and internationally to attract investors. We do engage the young ones in career talks and all that. In broad terms, ASHON provides a veritable platform that helps its members to improve on their professional practice through regular training in order to deliver value to the customers in line with the global best practices and grow the market's investor base. The whole objective is to really increase capacity and to enable our members focus on the emerging trends in the financial market .

Can you shed light on the main focus of the training?

The training's pre-occupation was the fundamentals of Commodity derivatives. We were exposed to the basic principles of Commodity derivatives, how it works, what an average broker should look out for, how to effectively trade and explain it to customers. How to play effectively within the market was highlighted.

An emerging trend is that government is now expanding its scope of diversification in terms of earning foreign exchange from other access other than crude oil. If we are diversifying and they have to go into commodities which has to do with agricultural products as well as solid mineral and gas, it means that there must be a platform where our members can play their intermediating roles in terms of trading on warehouses receipts electronically which is actually a major issue. The ultimate goal for our members is to be able to push for high turnover in this proposed market. The whole process is all about how we can play our role in the economy and ensure that the economy grows in the manner it supposed to grow. We must be part of the diversified economy as Nigeria would no longer be dependent on crude oil any longer.

Is this training a preparatory to ASHON's plan to float Commodity and Futures Exchange?

Obviously, yes. This is a preparatory ground because if we are trying to float a specialized exchange, our members must be positioned to be able to play effective role. By this, we need to understand what it is all about and so this is just like bringing them up towards the ABC of Commodity derivatives. They must be part of the revolution and always be on the top new developments in our dynamic market. We have strategically decided to at least take the bull by the horn by ensuring that our members are ready to operate within the market without technical encumbrance.

Now that the training has been completed, what is the next step?

The next step is for us to move on with our registration with the regulatory authorities and secure the all approvals for establishing our commodity and futures exchange. We shall deploy more tactics to ensure that our members embrace the technology that the Indians have provided. This will effectively help us in ensuring that we can be fit and proper to trade in the market using the latest technology to enhance our trading capacity in the market. The next thing is for us to work through the template in terms of the technology associated with commodity futures.

When will ASHON inaugurate the new exchange?

There is no specific timelines at the moment because it is too early to go into that. There are other parties that are involved in the whole process and we don't want to begin to give timelines to third parties. But for us, we would continue to work assiduously to ensure that at least, we deliver within the shortest possible time.

What is your advice to stockbrokers concerning this training?

My observation is that the training is an eye opener and confirmation of the saying that you cannot give what you do not have. My advice is that they should take advantage of the training to upgrade their knowledge and become relevant in the emerging trends in the market. The issue is that if you don't want to be left behind in this market, you need to understand that change is a constant thing and the only way for you not to be left behind in this market is to change positively by understanding and embracing the new technology, new products and the fundamentals of how to deal with those things to be part and parcel of the twenty first century broker. The twenty first century broker is broad knowledge base in terms of equities, bonds and other fixed income securities as well as commodities and futures. By this, the brokers can earn income from multiple channels and sustain the business.

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