The Securities and Exchange Commission (SEC) has urged commodities exchanges in the country to give priority to investor protection and attract more investment into the capital market.
The Director General of SEC, 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 at the weekend.
Yuguda urged the LCFE and the entire value chain to always have investor protection as the core mandate to boost their confidence and participation in the products.
“Gold has a great value. Once you 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. Investors should have confidence that anytime they want to sell this product, they are likely to get more than they put in, which is the true meaning of investment.”
The SEC DG pointed out that investment is about postponing current consumption for the future, noting investors must get some returns as a price for that postponement of current consumption.
“So, when you sell this product in the future and make a profit, 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 happened in the stock market in 2008, you find out that the investor confidence wanes,” he said.
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 a store of value, that is monetary gold or as jewelry.”
In his remarks, Chairman, Board of Directors, LCFE, Onyenwechukwu Patrick Ezeagu, stated 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.
According to him, with the support of the SEC, the novel foundation has been laid and gradually the commodities ecosystem is being reformed and transformed with development of innovative products and fungible instruments that are being introduced into the market.