Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC) has urged commodities exchanges to build robust investors’ protection at the centre of their operations in a bid to gain investors’ confidence and attract more investors.
Director General, Securities and Exchange Commission (SEC), Mr. Lamido Yuguda gave the charge during the presentation of Eko Gold Coins to SEC by the Lagos Futures and Commodities Exchange (LCFE) yesterday in Abuja.
Yuguda 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,” Yuguda said.
He noted 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.
“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.
He 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.