SEC Pledges to Adapt Regulations to New Financial Products and Services
By Patience Ikpeme
The Securities and Exchange Commission (SEC) has pledged to adapt its regulations to accommodate new financial products and services that are emerging due to technological advancements.
This commitment was made by the Director General of the Securities and Exchange Commission, Dr. Emomotimi Agama, while delivering his keynote speech at the 2024 Capital Market Solicitors Association Annual Business Summit held in Lagos recently.
Dr. Agama urged stakeholders in the capital market to embrace innovation as a catalyst for growth, increased efficiency, heightened transparency, and resilience. He stated that, “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”.
The SEC DG then called on stakeholders in the capital market to embrace innovation, highlighting its potential to drive growth, increase efficiency, enhance transparency, and build resilience. “Innovation is a catalyst for growth,” he stated. “It leads to increased efficiency, heightened transparency, and resilience in our capital market.”
He elaborated on the SEC’s strategic approach to regulating innovation, which focuses on three key areas: safety, market deepening, and problem-solving. “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,” Dr. Agama explained.
A major initiative highlighted by Dr. Agama is the SEC’s Regulatory Incubation programme, which supports new FinTech businesses. This programme permits these companies to operate within a controlled regulatory environment for one year while the SEC develops appropriate rules.
“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 said.
Dr. Agama also reiterated the importance of the Revised Capital Market Master Plan (CMMP 2021-2025), which aims to leverage technology and innovation to expand the Nigerian capital market. “One of the cardinal objectives of the Revised Capital Market Master Plan is to leverage technology and innovation to expand the depth and breadth of the Nigerian Capital Market, to enable it to contribute significantly to national economic development,” he noted.
However, Dr. Agama cautioned that with the embrace of innovation comes the need for vigilance regarding 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 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 warned.
He emphasized the importance of investor confidence, stating, “Investor confidence is the bedrock of any successful market. Fostering trust in innovative instruments through transparency and clear communication will be key.”
Dr. Agama called for collaboration among all stakeholders, including the CMSA, legal professionals, regulators, and market participants, to foster a forum for open dialogue and continuous improvement. “The success of these initiatives demands collaboration by all stakeholders. We must create a forum for open dialogue and continuous improvement,” he urged.
