SEC urges capital market innovation for sustainable growth

The Director General of the Securities and Exchange Commission, Emomotimi Agama, has urged capital market operators to embrace innovation as a pivotal driver of sustainable growth, efficiency, transparency, and resilience within the capital market.

In a statement made to The According on Monday, he disclosed this at the 2024 Capital Market Solicitors Association Annual Business Summit in Lagos with the theme ‘Revolutionising the Nigerian Capital Market through Innovative Financial Instruments for Sustainable Development’.

He stated that the SEC’s proactive stance in adapting regulations is to accommodate emerging financial products and services driven by technology, adding that this approach aims to foster a robust and reliable capital market ecosystem while supporting technological advancements.

“In its efforts to support innovation and growth in the market, the SEC has established a program 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. Central to the SEC’s strategy is the Regulatory Incubation Programme, designed to support new fintech businesses and enable the SEC to develop appropriate rules that address the challenges and opportunities presented by innovative technologies. Underpinning these efforts is the Revised Capital Market Master Plan (CMMP 2021-2025), which aims to leverage technology and innovation to expand the depth and breadth of the Nigerian capital market,” he said.

Agama cautioned stakeholders about associated risks such as cybersecurity threats, regulatory complexities, and market volatility.

“While the potential of innovation is undeniable, embracing it also comes with challenges. Hence, we must be mindful that the 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.

He noted the importance of robust risk management frameworks to mitigate these risks effectively while ensuring investor confidence through transparency and clear communication, which remains a priority for the SEC to sustain market stability amidst technological advancements.

He commended the collaboration among stakeholders at the Summit, emphasizing the need for continuous dialogue and improvement.

“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.”

The According had reported that the SEC has said that the safety of investors and their investments in the capital market is one of its reasons for initiating the regulatory incubation programme for fintechs.