LCFE, FMDQ  sign MoU to strengthen petroleum liquids market infrastructure

Lagos Commodities and Futures Exchange (LCFE) and FMDQ Clear Limited have entered into a strategic partnership to strengthen the clearing, settlement and risk-management infrastructure for petroleum liquids transactions in Nigeria’s emerging commodities market.

The two institutions signed a Memorandum of Understanding (MoU) on October 12, 2026, establishing a framework for FMDQ Clear to provide third-party clearing infrastructure and related services for petroleum liquids transactions executed on LCFE’s electronic trading platform.

Under the proposed arrangement, FMDQ Clear will serve as the Central Counterparty (CCP) responsible for clearing and settlement of petroleum liquids transactions, subject to the terms of the MoU and subsequent definitive agreements between the parties.

The partnership is expected to strengthen the post-trade architecture of the commodities market by providing access to established clearing technology, risk-management systems, collateral management and operational infrastructure.

It also marks an important step towards developing a more organised, transparent and efficient trading environment for petroleum liquids, with improved institutional safeguards against counterparty and settlement risks.

According to the MoU, LCFE is licensed by the Securities and Exchange Commission (SEC) to provide an electronic trading platform for structured trading in agricultural commodities, solid minerals and metals, as well as petroleum liquids.

The Exchange, which already operates an electronic trading platform across its approved commodity asset classes, is seeking to activate petroleum liquids trading as an additional market segment, leveraging its existing trading infrastructure.

LCFE has also secured the applicable licences from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to undertake petroleum liquids trading and clearing-house functions.

FMDQ Clear, on its part, is registered and regulated by the SEC as a Central Counterparty, providing clearing, collateral management and settlement services to clearing members in respect of derivatives, commodities and other financial instruments in Nigeria’s capital market.

Under the collaboration, FMDQ Clear will provide the clearing infrastructure and associated services, while LCFE retains its regulatory responsibilities for petroleum liquids clearing.

The MoU also establishes a framework for further negotiations and the execution of additional agreements and documentation necessary to operationalise the proposed partnership.

Speaking on the development, LCFE Managing Director, Akin Akeredolu-Ale, said the MoU aligns with the Exchange’s commitment to expanding strategic partnerships in risk management and strengthening the infrastructure required to support organised commodities trading.

He explained that the collaboration would enable LCFE to leverage FMDQ Clear’s existing clearing technology, risk-management systems and operational capabilities rather than independently developing a Central Counterparty infrastructure from the ground up.

According to him, this approach is expected to significantly reduce the time, capital investment and technical resources required to establish a robust post-trade clearing framework, while allowing the Exchange to benefit from an established institutional platform.

Senior Vice President, Government Affairs Division, FMDQ Group Plc, Emmanuel Etaderhi, said the MoU would reinforce collaboration between the two organisations and enable them to optimise their respective expertise and institutional capabilities.

The partnership is expected to create operational synergies between the two institutions, combining LCFE’s commodities trading platform and petroleum liquids market focus with FMDQ Clear’s specialised clearing and risk-management capabilities.

Also in attendance at the signing were an Executive Director of LCFE, Eyowan Ani;  Vice President, Clearing Risk Management Division, FMDQ, James Daves; and Senior Vice President, FMDQ Group, Oluwaseun Afolabi, among others.

The agreement underscores the growing importance of robust post-trade infrastructure in the development of Nigeria’s commodities market. By bringing together specialised trading and clearing capabilities, LCFE and FMDQ Clear are positioning the petroleum liquids segment for more efficient transaction processing, stronger risk controls and greater market confidence.