SEC harps on innovations to improve capital market efficiency

Yuguda said this in a goodwill message at the Nigerian Exchange (NGX) Ltd., hybrid Capital Market Conference held in Abuja on Tuesday.

The News Agency Nigeria (NAN) reports that the theme of the conference was: “The Future Ready Capital Market: Innovating for Nigeria’s Sustainable Recovery”.

He said that technology could make it easier for investors and market professionals to identify opportunities and conduct their businesses in a timely and cost-efficient manner.

Yuguda said that capital market globally plays a strategic role, not only in allocating scarce resources, but in harnessing the huge investment opportunities in agriculture, infrastructure, oil and gas, natural resources and other sectors of the economy.

Yuguda said: “Nigeria like most other countries in the world experienced weak growth in their economies as a result of the impact of the COVID-19 pandemic.

“The Nigerian economy is just recovering from the effect of the COVID-19 pandemic, with a Gross Domestic Products (GDP) growth rate of 4.03 per cent in the third quarter of this year from a contraction of 6.10 per cent in the second quarter of 2020.

“To sustain this trajectory, overcome some of the negative impacts of the pandemic and achieve the objectives of the developmental plans of the government, the capital market needs to continuously produce innovative products, platforms and processes.

“Innovation plays a critical role in the development of any capital market as it increases the market chances of reacting to changes, and enables discovery of new opportunities.”

Yuguda said that the International Organisation for Securities Commission (IOSCO) acknowledges that the use of technological innovations by market operators could potentially create significant efficiencies and benefits for firms and investors, including increasing execution speed and reducing the cost of investment services.

“However, IOSCO also notes that this use may create or amplify certain risks, which could potentially have an impact on the efficiency of financial markets, resulting in consumer harm.

“As the apex body responsible for regulating and developing the Nigerian capital market, SEC has strengthened market rules and regulations with the introduction of responsive rules and the amendment of existing ones to mitigate some of the risks posed by technological innovations.

“With a three-pronged objective to regulating innovations hinged on safety, markets deepening, and solution to problems, our regulations, are enabling, accommodating and futuristic.

“They also ensure adherence to our core regulatory mandates of investor protection and market development,” he said.

Furthermore, he stated that the SEC had put mechanisms in place to understand relevant innovations, build required capacity and subsequently deploy strategies to address them, adding that this process was ongoing and the Commission was deeply committed to this new phase and face of the Capital Market.

Yuguda also said that the SEC had revamped its enforcement mechanism and enforced its zero-tolerance against infractions in a bid to improve investors’ confidence in the market and to optimally perform its investor protection mandate as evidenced in the Commission’s aggressive fight against unlawful investment schemes, which in recent times had plagued the financial markets.

“We have also committed resources to enhancing our processes through fortification of our ICT infrastructure in the areas of Registration, Returns Rendition and Analytics.

Given that the advent of Financial Technology had changed how traditional capital market activities are being conducted, the SEC had embraced FinTech, and as such, had redefined its regulatory landscape to accommodate fintech-related capital market activities.

“To this end, we have developed rules on crowdfunding, Robo-advisory and Digital Sub-broking. In addition, we have developed a ’Regulatory incubation framework, which will be implemented in due course.

“To align our market with the global focus on sustainable financing, the SEC released its guidelines to the market on sustainable financial principles to guide regulated entities on how to establish relevant standards and policies for their respective organisations,” he stated.

Meanwhile, in his welcome address, the NGX Chairman, Mr Abubakar Mahmoud, said that as the order of globalisation continues to stir the world’s economies, it had become pertinent for stakeholders to appraise the issues and forge ahead.

Mahmoud said: “The theme of the conference is indeed apt and timely, in view of the emerging collaborations, strategic alliances and developments in the Nigerian capital market, especially as Nigeria works toward a sustainable post-COVID-19 recovery.

“As the order of globalisation continues to stir the world’s economies and new unprecedented issues such as the COVID-19 pandemic, it is pertinent for all stakeholders to appraise the situation to forge ahead with a collaboration journey toward sustainability and prepare for the future of our nation,” he said.

He also identified the capital market as the best funding source to tackle the huge infrastructure deficit in the country.

Mahmoud noted that increasing taxes was disincentive as the move placed more burdens on the citizenry.

NAN reports that the hybrid event was held in Abuja with several playing in the capital market ecosystem present.