The Securities and Exchange Commission has urged commodities exchanges in the country to have investor protection at the centre of their operations in a bid improve investor confidence and attract more investors.
Director General of the SEC, Mr. Lamido Yuguda gave the charge during the presentation of Eko Gold Coins to the Management of the Commission by the Lagos Futures and Commodities Exchange in Abuja, Thursday.
Yuguda specifically urged the LCFE and the entire value chain to always have investor protection at the core of their work because eventually this is what will make the product succeed.
“Now the gold itself has great value, once you put out your money and 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 because if it is taken off and investors have confidence that anytime I want to sell this investment am actually likely to get more than I put in which is the true meaning of investment.
The SEC DG stated that when people invest, they are postponing current consumption for future consumption, need to be paid some returns as a price for that postponement of current consumption.
According to him, “So when you sell this product in the future and make gain, you are actually being rewarded, but when you sell the product in the future and you make a loss, you are making two losses. One you are postponing current consumption and two you have not recovered your principal in the future. When people do that, as it happened in the stock market in 2008, you find out that the investor confidence wanes.
“So when we do things we have investor protection and investor interest at heart, you find out that you create a product, everything you are doing tells you this is the direction I am going. So when you see that product deviating, you go back to the drawing table and say I must make sure that investors make money out of this. If we do that the sky is the limit for this product, that you have demonstrated today”.
Yuguda commended the LCFE on the demonstration and presentation and assured them of the Commission’s support in the development of the product and in the efforts to enlighten both the market participants and the investors who will put in their money.
“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 store of value, i.e. monetary gold or as jewelry.
“When the price of gold moves in Dubai, the people in Zamfara state they know, people in Lagos state they know and ladies who have gold, and every time they take the gold to the market the gold dealers are actually prepared to buy. This is one product that does not get old, the older the better, because you buy at a cheap price and selling at a much higher price. So this is something that we truly want to support,” he said.
In his remarks, Chairman, Board of Directors, Lagos Commodities and Futures Exchange said Chief Onyewenchukwu Patrick Ezeagu that the core vision of setting up LCFE was to provide a viable structure that will transform the Nigerian commodities market and redefine practice standards which would catalyse economic growth in Nigeria.
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