SEC DG Says Innovations In Capital Market Require Vigilance By All Stakeholders

The Director General of the Securities and Exchange Commission, Dr. Emomotimi Agama wants stakeholders in the Nigerian capital market to embrace innovation, describing it as a catalyst for growth, increased efficiency, heightened transparency, and resilience.

Agama who spoke as keynote speaker at the 2024 Capital Market Solicitors Association Annual Business Summit  with the theme “Revolutionising the Nigerian Capital Market through Innovative Financial Instruments for Sustainable Development,” held in Lagos recently, the SEC is aware of new financial products and services emerging due to technology.

The commission, he assured, is committed to adapting its regulations to address the peculiarities of these innovations, just as he however cautioned that operators and participants seeking to embrace innovation “must remain vigilant to the risks they entail, including cybersecurity threats, regulatory complexities, and market volatility.”

This, he continued, is because although “the potential of innovation is undeniable, embracing it also comes with challenges. Hence, we must be mindful that exploration of new instruments must be balanced with robust risk management frameworks. The SEC will ensure appropriate safeguards are in place to protect investors and maintain market stability.

According to him, “The commission has a three-pronged approach to regulating innovation: safety, market deepening, and solutions to problems. This has always, and will continue to help create a more efficient and reliable capital market ecosystem.

“In the efforts to support the innovation and growth in the market, the SEC had established a programme of assessment called Regulatory Incubation to help new FinTech businesses. The programme allows them to operate for one year within a highly fortified and limited regulatory perimeter while the SEC develops applicable rules that address these innovative technologies. The incubation programme helps ensure investor protection and market stability while fostering financial technology advancements in the Nigerian Capital Market,” he stressed.

According to the SEC DG, one of the cardinal objectives of the Revised Capital Market Master Plan (CMMP 2021-2025), is to leverage technology and innovation to expand the depth and breadth of the Nigerian Capital Market, to enable it contribute significantly to national economic development.

“In order to facilitate the success of the RCMMP, a major task before the Securities and Exchange Commission, is creating an enabling regulatory and supervisory environment for innovation to thrive as means of deepening the Nigerian Capital Market in terms of new products & processes” he stated.

A statement by the SEC described investor confidence as the bedrock of any successful market, adding that fostering trust in innovative instruments through transparency and clear communication will be key.

“The success of these initiatives demands collaboration by all stakeholders, including the CMSA, legal professionals, regulators, and market participants. We must create a forum for open dialogue and continuous improvement,” he further added.

Dr. Agama commended the organisers of the event for bringing together thought leaders from diverse sectors of finance, law and the capital market, alongside regulators and operators, to exchange insights towards advancing the Nigerian capital market and by extension, the Nigerian economy.