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Commodity Exchange: ASHON, CSCS finalises arrangement for depository services

AS part of the final preparation for the commencement of operation of the Lagos Commodity and Futures Exchange,   LCFE, the Association of Stockbroking Houses of Nigeria (ASHON)     has completed strategic arrangement   with Central Securities Clearing System (CSCS) Plc   on clearing and settlement services.

Commenting on the new business relationship between ASHON and CSCS, the Acting Chief Executive Officer of Lagos Commodity and Futures Exchange, Mr. Akin Akeredolu-Ale, explained that infrastructure for trading, clearing and settlement of transactions were fundamental to the success of any Commodity Exchange and indeed remains real challenge that must be addressed at every point in Nigeria’s market.

According to him, ASHON and CSCS are well positioned to ensure seamless take-off of the new Commodity and Futures Exchange.

He stated: “The memorandum of understanding signed by ASHON and CSCS   is the key heartbeat of the setting up a commodity exchange. Basically in anywhere in the world some of the fundamental challenges in setting-up a commodity exchange are the issues of trading, clearing, settlement and electronic receipts.

“ After the trading, how are they going to be settled and before they are settled how are the electronic receipts going to be transferred from one hand to the other?

“ The good thing is that our CSCS has the infrastructure to do that. It has capacity for people to trade on commodities and settle commodities. The CSCS is well positioned to handle all aspects of our transactions on commodity and futures. “Apart from the trading aspect, the   link between the traders and the clearing members and the interbank settlement would run through the CSCS.”

He also explained that custodians would later participate in the system.

Corroborating Akeredolu-Ale, the Chief Executive Officer, CSCS Plc, Mr.   Jalo-Waziri, confirmed that the clearing house had always been associated with the state-of- the-art technology for clearing and settlement of transactions .

Jalo-Waziri expressed optimism that by the Memorandum of Understanding signed with the Commodity Exchange, the Clearing House was ready to handle all its clearing and settlement.

Commenting on the strategic relationship, ASHON’s Chairman, Mr Patrick Ezeagu explained that

without   an effective depository a commodity exchange could not   function.


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