Overview of Lagos Commodities and Futures Exchange (LCFE) Activities and Developments
The report to SEC's Capital Market Committee highlights the important developments and implications for capital market activities by LCFE. It covers asset classes, stakeholder engagements, onboarding processes, registration statistics, trade fulfillment details, and more. LCFE's focus on commodities like oil, gas, minerals, and agricultural products is evident through its engagement with various entities and the significant quantities involved in trades. The report outlines key steps taken in terms of technology, infrastructure, fee structures, and stakeholder partnerships, showcasing LCFE's commitment to creating a robust trading platform.
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LAGOS COMMODITIES AND FUTURES EXCHANGE (LCFE) Report to SEC s Capital Market Committee Report to SEC s Capital Market Committee (CMC) (CMC) November 2019 November 2019
OUTLINE Asset Classes Important developments & Implications for the Capital Market Activities Factors Responsible for the developments Challenges & Mitigative Measures Issues for CMC consideration & deliberation
PRODUCTS (ASSET CLASSES) Oil & Gas & By-Products Solid Minerals Agricultural Commodities (Grains/Liquids) Currencies
IMPORTANT DEVELOPMENTS WITH IMPLICATIONS ON CAPITAL MARKET ACTIVITIES FROM THE LAST CMC MEETING ENGAGEMENT OF STAKEHOLDERS Onboarding of Warehouses, Tanks Farms, Insurance companies and Dealing member firms. Credit Bureau for ascertaining the credit worthiness of potential clients of the Exchange. Technology: Servers, Central Securities Depository (CSD), Trade Matching Engine, Technology for Warehouse Management. Issuing Houses. Settlement Banks and other major financial institutions. International Certification and Standardization Agents for quality assurance of Commodities in our Warehouses. Acquisition of necessary infrastructure for the commencement of operations: Conducive office space, Standard trading floor and installation of necessary equipment. Onboarding of Commodity Brokers Fee structure for various stakeholders involved in trades on our platform
IMPORTANT DEVELOPMENTS WITH IMPLICATIONS ON CAPITAL MARKET ACTIVITIES FROM THE LAST CMC MEETING LCFE has fully registered the following: Floor traders: Dealing Member Firms: 22 Aggregators: Credit Bureaus: Warehouses 43 Shortlisted participants in the Ecosystem 750 20 Pre-registeration Stage: 2 Indigenous Oil Producers who produce 6000 and 11,500 barrels of oil per day 3 3 Process Flow Process Flow SEC FEES (Unapproved yet ) Final beneficiary Settlement Bank CSD Warehouse Trade Matching Engine CSD
TRADES FUFILMENT TRADES RECEIPT INTENTION ASSETS LOCATION QUANTITY (MT) Sub-Total 9,544 ASSETS LOCATION QUANTITY (MT) 35,500 MAIZE Maize Kaduna, Calabar, Jos, Anambra, Ogun Kebbi, Kano, Niger, Anambra, Kaduna, Kwara,, Gombe, Suleja Adamawa, Jigawa, Kaduna, Niger, Taraba Rice 18,015 Rice 75,200 Zamfara, Kebbi, Adamawa, Jigawa, Kebbi, Niger, Taraba, Kaduna Sorghum 727 Zamfara - - - 18,443 Kaduna, Kano, Adamawa, Katsina, Sagamu, Ibadan Soya Beans Soya Beans 150,600 Benue, Zamfara, Kaduna, Adamawa, Jigawa, Niger, Taraba Grand Total 46, 001.74 261,300.00
FACTORS RESPONSIBLE FOR THE DEVELOPMENTS The earlier stated LCFE developments occurred to address the following necessities in the commodities ecosystem: Need for seamless and trusted Exchange transactions of Commodities within the ecosystem. Need for standardized market for the exchange of commodities within and outside the country Increasing demand for standardised commodities in the commodities market Need for expansion of capacity among stakeholders of the commodity ecosystem Need for liquidity in the commodity ecosystem.
CHALLENGES MITIGATIVE MEASURES Locating warehouses in certain key areas in Nigeria. Advert Placement in the newspapers Difficulty of warehouse owners in adapting to required business model i.e. the practice of registration of accredited warehouses as against their desire of the Exchange leasing the warehouses. Continuous engagement; Sensitization of individual warehouse owners to help with understanding of LCFE s business model and future benefits. Engagement of large-scale logistics & warehousing companies . Legislation to make Warehouse receipts legal and acceptable financial instruments Discussions with relevant stakeholders
ISSUES FOR CMC CONSIDERATION & DELIBERATION 2 1 3 Confidence in Warehouse receipt system to elicit financing from banking institutions Legislation to make Warehouse receipts legal and acceptable financial instruments Accreditation of Collateral Managers
