LAGOS COMMODITIES AND FUTURES EXCHANGE(LCFE)

  The establishment of Lagos Commodities and Futures Exchange(LCFE) which is expected to commence operations soon is a welcome development. Essentially, we lack standardized exchange where futures and options can be traded. We have such standardized exchanges abroad like London International Futures and Option Exchange(LIFFE),Chicago Mercantile Exchange, Chicago Board of Trade etc. Futures and options are derivatives. They are contracts that their performances are driven by the movement in prices of the underlie assets or reference entities. Futures have mark to market performance and they are traded on the floor of exchange on daily basis. Options can be written on equities and bonds.We have bonds with embedded options.We have two types of options.Option to buy is called a call option while option to sell is a put option. Establishment of LCFE means that Nigeria is keying into global trend on trading of derivatives instruments on her exchange.