A financial expert, Professor Uche Uwaleke, Monday urged the federal government to provide enabling environment to strengthen the operations of six exchanges operating in Nigeria.
Uwaleke, Head of Banking and Finance Department, Nasarawa State University, Keffi, made the appeal in an interview in Lagos.
The exchanges are AFEX Commodities Exchange, FMDQ OTC Securities Exchange (FMDQ ), NASD OTC Securities Exchange (NASD), Nigeria Commodity Exchange, the Nigerian Stock Exchange (NSE) and the newly approved the Lagos Commodities and Futures Exchange (LCFE).
He said providing enabling environment by the government; especially power, transport and bandwidth infrastructure would strengthen the operations of these exchanges.
Uwaleke said the primary function of an exchange was the provision of facilities that enable trading on an asset class, noting that exchanges needed to invest massively in information technology infrastructure.
“The provision of an enabling environment by the government, especially power, transport and bandwidth infrastructure will go a long way in reducing the cost to the exchanges of making such investments,” he said.
He said the difficult operating environment tied to the present macro -economic situation is probably the reason their impact is yet to be felt.
Uwaleke said massive investment in infrastructure; especially information technology was paramount to deepening activities in the exchanges.
He added that “the flagship exchange, the NSE still experiences downtime challenges from time to time. CSCS is a subsidiary of NSE and the settlement cycle of T + 3 days can further be shortened with improvement in technology.”
Uwaleke said the commodity exchanges face the challenge of warehouse and transport infrastructure.
On the recently launched Association of Securities Exchanges of Nigeria (ASEN), he said the idea behind ASEN really was to enhance information sharing and possibly ensure lower transactions costs through sharing of facilities.
Uwaleke said the association with the support of SEC should aim at consolidating as a single exchange to benefit from economies of scale in the near time.
He said single exchange was in line with current trends globally as witnessed in South Africa and South Korea.
