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By Chukwuma Umeorah
The Director General of the Securities and Exchange Commission (SEC), Emomotimi Agama, has cautioned stakeholders in the capital market to remain vigilant to the risks associated with innovation, including cybersecurity threats, regulatory complexities, and market volatility.
Agama was the keynote speaker at the 2024 Capital Market Solicitors Association (CMSA) Annual Business Summit held recently in Lagos with theme, “Revolutionising the Nigerian Capital Market through Innovative Financial Instruments for Sustainable Development,” where thought leaders from finance, law, and the capital market, along with regulators and operators were gathered.
He highlighted the SEC’s awareness of emerging financial products and services driven by technology and reiterated the Commission’s commitment to adapting regulations to address these innovations.
He said, “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.”
Agama also discussed the SEC’s regulatory incubation programme, designed to support the growth of 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.”
SEC cautions capital market stakeholders on risks of innovationOne of the core objectives of the Revised Capital Market Master Plan (RCMMP 2021-2025) is leveraging technology and innovation to expand the Nigerian Capital Market’s depth, contributing 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 a means of deepening the Nigerian Capital Market in terms of new products and processes,” Agama said.
However, he cautioned that embracing innovation comes with challenges.
“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.”
“Investor confidence is the bedrock of any successful market. Fostering trust in innovative instruments through transparency and clear communication will be key.” This is even as he stressed the importance of collaboration among all stakeholders, including the CMSA, legal professionals, regulators, and market participants, to create a forum for open dialogue and continuous improvement.
