LCFE, FMDQ Partner to Strengthen Petroleum Liquids Market Infrastructure

The Lagos Commodities and Futures Exchange (LCFE) and FMDQ Clear Limited have formed a partnership aimed at bolstering the clearing, settlement, and risk-management infrastructure for petroleum liquids transactions within Nigeria's growing commodities market. The two entities signed a Memorandum of Understanding (MoU) which outlines FMDQ Clear's role as the Central Counterparty (CCP) for clearing and settling petroleum liquids transactions on LCFE's electronic trading platform.

The deal is set to enhance the post-trade architecture of the market by providing access to advanced clearing technology, risk-management systems, collateral management, and operational infrastructure.

LCFE's Managing Director, Akin Akeredolu-Ale, highlighted that the MoU aligns with the Exchange's dedication to forming strategic alliances in risk management and improving the infrastructure needed to support organized commodities trading. He explained that the collaboration would enable LCFE to utilize FMDQ Clear's existing clearing technology, risk-management systems, and operational capabilities, instead of building a Central Counterparty infrastructure from scratch.

This approach is expected to considerably lessen the time, capital expenditure, and technical resources needed to create a sturdy post-trade clearing framework, while allowing the Exchange to take advantage of an established institutional platform.