The regulatory framework for commodities exchange in Nigeria is the Investment and Securities Act (ISA) 2007 and the “Requirements for Registration as Commodities Exchange Operators” issued by the Securities and Exchange Commission (SEC) pursuant to the ISA. The ISA mentions “commodity exchanges” in section 13(b) as one of the entities under the regulatory purview of the SEC. However, apart from the Requirements for “Registration as Commodities Exchange Operators”, there is no definite framework to regulate the operation of commodity exchanges under the Act. In recognition of the need to improve the commodity trading market/ecosystem, SEC set up a Technical Committee on Commodities Trading Ecosystem in 2017 with the mandate
“to identify challenges of the existing framework/infrastructure and develop a roadmap for a vibrant ecosystem”.
The Report of the Committee was exposed stakeholders’ comments in the first quarter of 2018.
With the demise of commodity boards and commodity marketing companies in the mid-1980s, a number of challenges arose in respect of price discovery, produce aggregation and grading, etc. The gap created by the demise of the commodity boards was brought to light with the comments of the immediate past Minister for Agriculture and Rural Development, Chief Audu Ogbe when he announced that he was considering bringing back the commodity boards, thereby sparking off a debate on the subjectii. The two top arguments in favour of the return of the commodity boards revolved around the need to ensure the quality of produce, especially those destined for export
markets; and transparency in market/price information. Those against the idea raised issues about the monopolistic powers of commodity boards as well as the bureaucratic inefficiency that may overtake its running. The debate also recognised the alternative approach presented by privately run commodity exchange system in addressing the gap left by the commodity boards.
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