ASHON, CSCS Sign MoU on Commodity and Futures Exchange
Association of Stockbroking Houses of Nigeria (ASHON) has sealed strategic relationship with the Central Securities Clearing System (CSCS) Plc as part of final preparation for the commencement of operations of the Lagos Commodity and Futures Exchange(LCFE).
Commenting on the relationship between ASHON and CSCS the acting Chief Executive Officer of LCFE, Mr. Akin Akeredolu-Ale explained that infrastructure for trading, clearing and settlement of transaction are fundamental to the success of any commodity exchange and indeed remain real challenge that must be addressed at every point.
According to him, ASHON and CSCS are well positioned to ensure seamless take-off of the new commodity and futures exchange.
“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 CSCS Plc 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,” Akeredolu said.
Speaking in the same vein, the Managing Director/Chief Executive Officer, CSCS Plc, Mr. Haruna Jalo-Waziri said that the clearing house had always been associated with the state-of - the art technology for clearing and settlement of transactions .
He expressed optimism that by the MoU signed with the commodity exchange, the clearing house was ready to handle all its clearing and settlement.
“After careful study of the details of the proposed Commodity and Futures Exchange, we were very convinced to go ahead in partnership with ASHON. This has brought about the signing of the MoU. The CSCS is fully ready for trade settlement aspect of the deal,” he said
Also commenting on the strategic relationship, Chairman of ASHON, Chief Patrick Ezeagu explained that without an effective depository a commodity exchange could not function.
“Our MoU signing with the CSCS brings the needed technical support that will ensure professional delivery and settlement happens electronically. The CSCS shall deploy the technology which it has already been using for others like NASD and FMDQ, and for us to be able to develop . It will cost us several millions of dollars to acquire and so we are just taking advantage of capacity that already exists there, “Ezeagu said.