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SEC Nigeria moves to unify trading platforms and financial market infrastructures among Central Securities Depositories

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By Chrystal NK Chukwudebe

TUE 29 JUNE, 2021-theGBJournal- The Securities and Exchange Commission, (SEC) Nigeria has proposed a new interoperability arrangement among Central Securities Depositories, seeking to unify the multiple trading platforms and Financial Market Infrastructures (FMIs) which currently provide comparative services in depository, trading, clearing and settlement activities.

SEC Nigeria says this has become necessary in order to enhance the efficiency of trading and settlement functions as well as align the market with international best practices, and it consequently issued a framework today ‘’to ensure the efficiency of the market and the protection of investors.’’

According to SEC, this framework is being issued in line with its mandate to regulate the capital market with the objective of ensuring protection of investors, maintaining fair and efficient market as well as reduction of potential systemic risks in trading, clearing and settlement ecosystem.

‘’The Interoperability arrangement will potentially liberalize trading and settlement activities, enhance efficient deployment of capital as well as cost effectiveness in the market,’’ SEC said.

According to the Committee on Payments & Market Infrastructures and International Organization of Securities Commissions (CPMI-IOSCO) Principles on FMIs, FMI link is a set of contractual and operational arrangements between two or more FMIs that connect the FMIs directly or through an intermediary.

In the proposed Interoperability arrangement, as recommended by the CPMI-IOSCO Principles for FMIs, relevant provisions have been made for identification, monitoring and management of interlink risks by the respective CSDs with the overall objective of reduction in systemic risks.

Within the new framework, SEC expects all Securities Exchanges and Central Securities Depositories (CSDs) to Take necessary steps to put in place requisite infrastructure and systems for implementation of the framework, including any amendments to the relevant rules and regulations;

2- Bring to the attention of their members and Participants the provisions of this framework as well as publish the same on their websites and

3-Communicate to the Commission, the status of implementation of the provisions of this framework within three months of the date of issuance of the framework.

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