THE COMMODITY EXCHANGE COMMUNITY AND THEIR ROLES
The Securities and Exchange Commission undertakes the responsibility of regulating the activities of the Exchange. The commission performs these regulatory activities to protect investors and market operators to ensure market integrity. Regulation is carried out through the deployment of the following tools: registration of securities and market intermediaries to ensure that only fit and proper persons / institutions can operate in the market, onsite or off-site inspection, audits of market, surveillance over exchanges and trading systems to forestall breaches of market rules as well as deter and detect manipulations and trading practices which can cause market disruption.
The central securities depository is a technology company that operates a computerized depository, clearing, settlement, and delivery system for transactions on the The Central Securities Clearing System Plc (CSCS) is currently the CSD of the Lagos Commodities and Futures Exchange. CSCS is the Central depository for spot contract receipt and securities of companies listed/quoted on the platform of the LCFE, Sub-registry for all quoted securities (in conjunction with registrars of quoted companies), clearing and settlement of transactions.
These are financial institutions responsible for the acceptance of registration and trading monies from aggregators, investors, and other participants in respect of spot transactions and securities offers. They also perform other services ancillary to the function. Wema Bank Plc and Heritage Bank Plc are the registered settlement bank of the LCFE.
These are institutions registered by the commission to carry out the following activity on the Exchange; issuance of credible Warehouse receipts and other necessary arrangements for commodity financing, provision of quality warehousing services involving storage and preservation of commodities, stock audit, evaluation, & verification services, and providing enabling arrangements for collateral commodity financing.
The clearing partner of the LCFE are clearing members who acts in relation to effecting clearing and settlement of derivatives transactions on the Exchange. NG Clearing Nigeria Plc has been engaged by the LCFE to perform this service.
Products traded on the Exchange must comply with set grades and specification. To ensure compliance to these rules, the Exchange have engaged companies like COTECNA SA to carry out such functions.
Rating Agencies play a critical role in the ecosystem. They perform the following function: provision of credit ratings to companies and government establishment, provision of ratings to the debt Instruments, rating of the credit worthiness of Entities/Securities, and other services ancillary to the function.
These are companies incorporated and registered with the Securities and Exchange Commission and has been issued a license to deal in commodities and other securities listed on the exchange. Currently the Exchange has over 30 Dealing Member Firms registered.
These participants have the following functions; provision of financial advisory services for companies and issuers of securities under the relevant provisions of the Act, CAMA or any other law, acting as agent of issuer for purposes of issuances of securities and schemes under the relevant provisions of the Nigerian law, co-ordinating activities of other professionals and parties to an issue, preparing the prospectus, registration statement and other transaction documents. Currently the list of registered Financial Advisers include GTI Capital Ltd, Kedari Capital Ltd, Stethnic Finance etc.
These are registered brokers of the Exchange who shall have the following functions: sale and purchase of commodities and securities on behalf of his clients, work with other capital market operators in the raising of capital for an Issuer, and provision of relevant financial information/research for its client.
Storage facilities are critical structural assets needed for the success of the ecosystem. Companies and Individuals who own these facilities are essential stakeholders who provide storage for the commodities that will be traded on the Exchange. Companies like Flux Logistics, GMC Logistics etc are partners of the Exchange.
These are companies involved in the business of commodities trading. They are bulk buyers and sellers of commodities (agricultural, solid minerals, oil & gas).
Such arrangement where an underwriter undertakes for a permissible commission to pay an issuer of securities at a predetermined date, an amount based on the price of the securities determined in conjunction with the issuer and the issuing house with a view to resale not as a form of investment. The functions of underwriter include underwriting of securities either of a firm.
These are institutions who holds securities/assets on behalf of known investors but whose name appears on the issuers register as a fiduciary nominee for the benefit of the investor and who operates a system of central handling of securities of a particular class of an issuer deposited within its system and may be transferred, loaned or pledged by bookkeeping entry without physical delivery of certificates.
The Registrar performs the following functions, maintain the register of members of a company and unit holders of securities and effecting appropriate changes in the register, issuing securities/note certificates, return surplus monies and monies for rejected applications, preparing and dispatching interest and any other function ancillary to all the above
The trustee monitors the activities of the fund manager and custodian on behalf of and in the interest of note holders, ensuring that the custodian takes into custody all the assets and holds it in trust for the holders in accordance with the Trust Deed and Custodial agreement, monitors the register of note holders and every other services ancillary to their function.
These are companies authorised and appointed to review and verify the accuracy and financial records of issuer companies.
The companies help develop the ecosystem by providing safety and security to transactions on the Exchange. They eliminate the uncertainties of the trading business and provides cover for contingencies.