The Securities and Exchange Commission (SEC) has said that the digitisation of the capital market will be instrumental in establishing new standards for capital raising in Nigeria.
According to the SEC, this initiative is expected to significantly contribute to the current administration’s goal of achieving a US$1 trillion economy.
The Director-General of SEC, Dr. Emomotimi Agama stated this during a press briefing and stakeholder engagement session on the NGX E-Offering Platform held at the Nigerian Exchange Group House in Lagos on Wednesday.
Additionally, Agama also noted that the digital transformation initiative will help to address knotty issues of unclaimed dividends in the country.
“I would like to commend NGX Group and all partners on this development. This digital transformation initiative is a testament to our shared commitment to fostering an innovative, efficient, and reliable capital market, embedded in the Capital Market Masterplan,” he said.
Younger generation of investors
He noted that by leveraging technology, the Nigerian capital market can attract the younger generation of investors, enhance regulatory oversight, and create a world-class market.
“This digitisation will play a crucial role in setting a new standard for capital raising in Nigeria and enable the capital market to support the achievement of the US$1 trillion economy target of the current administration
Why should there be unclaimed dividends? This is going to help us address that problem. Any issues associated with payments can be managed because we are connected to the payment gateway and have the necessary payment infrastructure in place,” he said.
Financial market infrastructure
Agama emphasized the complexity of the financial market infrastructure, which includes the payment system, depository, exchanges, repository, and all supporting elements.
“It’s like a plumbing system in your house. A significant development in the capital market is the implementation of the straight-through process.
“Previously, we had direct cash settlement as part of this process. Now, we are going to complete it,” Agama explained. “What does that mean? With the press of a button, everyone entitled to receive a payment will get what they are entitled to without any human intervention.”
“This is digital innovation. That is the future. That’s what we are going to do,” he added.
He stated that this digital approach will ensure that the issue of unclaimed dividends is resolved.
Agama noted that the core issue of unclaimed dividends is about identity adding that once it is addressed there will be no reason for anyone to leave their money with the bank.
Group Managing Director/Chief Executive Officer of NGX Group, Temi Popoola said that the platform marks a pivotal moment in the evolution of the Nigerian capital market.
Subject to SEC approval
He noted that subject to SEC approval, the innovative platform represents a significant advancement in digitising the capital raising process for Issuers.
According to him, stakeholders are expected to benefit from enhanced efficiency, streamlined due diligence capabilities, ease of use and accessibility, faster information dissemination, and seamless compliance with regulatory requirements, among other features.
“With the support of the regulator and our stakeholders, we have developed an end-to-end digitised market infrastructure platform for distributing financial products, in this case, public offers and rights issues.
I can assure the investing public that robust payment systems, comprehensive Know Your Customer protocols and strong fraud and risk management measures are fully integrated, also ensuring standard capital market intermediation is upheld without compromise,” he said.
Popoola noted that the digital platform aims to boost retail participation in the capital market, promote financial inclusion, and further deepen the pool of available capital.
Alhaji (Dr.) Umaru Kwairanga, Group Chairman of Nigerian Exchange Group, noted that as part of the group’s strategy to expand the market, he believes this new digital platform will broaden market reach and attract a wider range of investors, leveraging partnerships with SEC and other stakeholders.
“Our initiative stems from recognizing the need for a more efficient, transparent, and inclusive process in capital raising. It represents a significant step towards modernizing our market operations and enhancing accessibility for issuers and investors alike,” he said.
