Firms To Develop Infrastructures For Commodity Futures in Nigeria
AFEX Commodities Exchange Limited and NG Clearing Limited have signed an agreement to facilitate the trading and clearing of futures contracts for commodities such as cocoa, paddy rice, maize, and soybeans in Nigeria.
The signing ceremony took place on Wednesday, November 9, 2022, in Lagos, where AFEX CEO, Ayodeji Balogun and the CEO of NG Clearing, Mr Tapas Das, represented their companies.
It was noted that the agreement is a precursor to developing the technological infrastructure that will underpin the introduction of commodity futures in Nigeria.
AFEX Commodities Exchange will serve as the trading venue, while NG Clearing will serve as the Central Counterparty that guarantees the settlement of trades.
Currently, trading commodities such as cocoa, maize, paddy rice, and others are limited to the spot and OTC markets.
And this exposes market participants to frequent price movements and counterparty risk. With the futures market, participants can lock in prices and positions of various commodities ahead of time without facing the risk of default by a counterparty.
According to AFEX CEO, the company share a drive with market regulators and other players in Nigeria’s capital market to deepen the market and unlock financing options and alternative investment classes for players in the commodities ecosystem.
He said, “This collaboration with NG Clearing is a new leap for the financial market in the country that further opens opportunities for generating shared prosperity through the commodity market. We believe that this would further position the country as a preferred capital destination with a viable path for effectively managing risks in key sectors of the economy.”
Speaking further, Mr Taps Das of NG Clearing said the partnership with AFEX will usher in a new phase in the development of Nigeria’s financial and agricultural sectors.
“As the central counterparty, we bring confidence and trust to the market as we will be guaranteeing the execution of the trades through our resilient collateral management processes,” he added.
Agro Nigeria
