The country’s commodities exchanges have been encouraged by the Securities and Exchange Commission (SEC) to prioritize investor protection and draw more capital into the capital market.
When the Lagos Futures and Commodities Exchange presented Eko Gold Coins to the management of the commission over the weekend, Lamido Yuguda, director general of the Securities and Exchange Commission, gave the instruction.
To increase investor confidence and involvement in the products, Yuguda urged the LCFE and the entire value chain to consistently prioritize investor safety.
“Gold has a great value. Once you 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. Investors should have confidence that anytime they want to sell this product, they are likely to get more than they put in, which is the true meaning of investment.”
The SEC DG emphasized that investing involves deferring current spending for the future, adding that investors must receive some returns in exchange for deferring current consumption.
“Accordingly, if you sell this thing in the future and make a profit, you will be rewarded; however, if you sell it in the future and lose money, you will suffer two losses.
“In the first place, you are delaying current consumption, and in the second, you have not yet recouped your principal. You discover that investor confidence declines when people do it, as was the case in the stock market in 2008, he added.
Yuguda praised the LCFE for their presentation and demonstration, and he promised them of the commission’s support for the product’s development and for efforts to educate both market participants and potential investors.
“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 a store of value, that is monetary gold or as jewelry.”
Onyenwechukwu Patrick Ezeagu, the chairman of the LCFE Board of Directors, stated in his remarks that the main goal of establishing LCFE was to create a workable structure that would transform the Nigerian commodities market and redefine practice standards, which would stimulate economic growth in Nigeria.
He claims that with the help of the SEC, a novel foundation has been established, and the commodities ecosystem is progressively being reformed and revolutionized with the introduction of cutting-edge items and fungible instruments to the market.
