Nigeria: Ashon Highlights Measures to Grow Commodities Exchanges

18 February 2021

The Association of Securities Dealing Houses of Nigeria ( ASHON) has urged the federal government to initiate policies that will enable commodities exchanges to contribute to economic growth in the country.

The call was made by the Chairman of ASHON, Chairman, Chief Onyenwechukwu Ezeagu, in a statement, advocating a level playing field for all operators of commodities exchanges in Nigeria.

According to ASHON, an enabling operating would enhance optimal performance of everyone in the commodities exchanges' value chain.

" To enable the operators in the commodities ecosystem operate optimally, the government should enact relevant policies that prevent illegal mining by foreigners, ensure autonomy of the capital market apex regulator, the Securities and Exchange Commission (SEC), protect export proceeds, legislate laws to enable Agricultural Commodities to be linked to financial markets and fungibility and support for Pension funds for increased participation in the commodities ecosystem," he said.

The securities dealers noted that the proposed capital injection of N50 Billion into the Commodity Exchange of Nigeria (NCX) might have unintended effect of creating uneven playing ground for other commodities exchanges that are privately promoted.

" The announcement to inject N50 billion into the NCX by CBN is a welcome development. Any act by the federal government to stimulate the growth and development of the commodities ecosystem through the commodities exchanges is highly beneficial to the entire ecosystem.

"Commodities exchanges play an important role in the commodities ecosystem because they introduce structure, transparency, and price discovery into the system.

"It is important to note that commodity exchanges are not commodity traders, they are simply a structured platform that deal in both commodities spots and commodities securities in multi-asset classes as approved by SEC," Ezeagu added.

He explained that to encourage the privately owned commodities exchanges, the government could ensure an open liaison opportunity between its agencies and the commodities exchanges to create the opportunity for: joint stakeholder sensitisation forums for commodity participants and regulatory bodies; committees for the development of financial funds and instruments to be listed on the commodities exchanges; partnerships for the accumulation of data to support the ecosystem such warehouse distribution, commodities distribution, commodities consumption; and engagements for the development of legal and regulatory framework for effective commodities trading.

"Support for the ecosystem can be provided in terms of sensitization programs for all the participants to educate them on the certification and standardisation requirements for commodities, relevant production practices, packaging best practices and cold chain equipment," he stated.

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