The Nigeria Commodity Exchange (NCX), a parastatal under the Federal Ministry of Trade and Investment has expressed its readiness to lend the necessary support in line with its core objectives to engender transparency efficiency and trust in the mining industry.
This position was canvased on Monday, October 14 at the first day of the 4th Nigeria Mining Week 2019 in Abuja.
Highlighting how the activities of her office can make a significant impact in mining sector generally, the Managing Director and Chief Executive Officer, Nigeria Commodity Exchange (NCX) Zaheera Baba Ali revealed that the ongoing campaign for economic diversification and the growth in Nigeria population, which has led to increase in demand for agricultural commodities and solid minerals has raised concerns on how best to meet the local and international market demand.
Ali, who was represented by Kingsley Emeghara observed that over the counter (OTC) transactions, default, quality related issues and others necessitated the creation of Nigeria Commodity Exchange (NCX).
Enlisting marketing, financing and risk management as the major functions of her office, Ali said, Commodity Exchange provides an organized market different from over the counter (OTC) market that has rules, regulations and guidelines that must be followed by players and participants.
She said her office trades in contracts and commodities that are readily available and in deliverable states while providing an electronic robust platform that guarantees price discovery, quality assurance and effective counter party risk management for participants in solid minerals and agricultural products.
“Our vision is to be the foremost commodity exchange in Africa that will provide worldwide and transparent access to agricultural commodities and solid minerals in a manner that will guarantee sector transformation, sustainable income and improve standard of living of Nigerians.
“We shall actualize this by way of mission through the provision of a transparent and secured trading platform that will engender price discovery as well as generate quality parameters for agricultural commodities and solid minerals for socio-economic transformation of the Nigerian economy” she stated.
Describing NSX as a referee to the buyer and seller, the MD said as an umpire, the Exchange does not buy or sell the same commodity it provides the platform for the trading, adding that it cannot be a referee and a player at the same time.
She listed ordinary trading members, institutional trading members, commodity merchants, non-trading members such as high network individuals as those who have powers to trade within the Exchange.
“Specific activities of the Exchange include clearing and settlement of trade through the clearing house. Trading application is designed in such a way that there’s a direct interface between the Exchange and the clearing house. So once the trade is consummated, the clearing house clears. Clearing is simply the process of delivery, handing over physical commodity to the buyer while settlement is the process of transfer of cash flows” she explained.
She also added as another activity of her organization to include Surveillance and Risk Management as exchange activity, in order maintain the integrity and confidence of the investing public, which she said is important because of the role it plays in bringing people to come and patronize the platform.
Ali assured mining operators that under the platform, prices are determined based on market forces, adding that there’s a formalized trading of solid minerals in organized central market, as well as default proof clearing settlement system, which she said will promote investment on the solid mineral sector and increase GDP.
She also expressed the readiness of NCX to stimulate the interest of local financial institutions to fund solid minerals development and progress in Nigeria.
“We see a vibrant, well-developed mining sector that is in a position to significantly contribute to the growth and development of the Nigerian economy, seen as critical stakeholder and used a vehicle for driving the economic diversification of the country.
“We see a sector in which the players are economically prosperous by the effective utilization of the NSX platform, where efficiency and transparency of trade, price discovery, quality assurance and quality certification are guaranteed” she concluded.
