The Securities and Exchange Commission has issued an interoperability/financial infrastructure link framework among central securities depositories to enhance the efficiency of trading, settlements and aligning the market with international best practices.
SEC said in a statement on Sunday that the issuance of the framework was essential as the Nigerian capital market had witnessed significant growth in the last few years in size, participation and tradable instruments.
The regulator said it had impacted the market structure in composition and interconnectedness.
It said, “Consequently, interoperability arrangement has become necessary in order to enhance the efficiency of trading and settlement functions as well as align the market with international best practices.
“According to the Committee on Payments and Market Infrastructures and International Organization of Securities Commissions 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.
“The interoperability arrangement will potentially liberalise trading and settlement activities, enhance the efficient deployment of capital as well as cost-effectiveness in the market.”
SEC noted that efficiency and investor protection were critical to the FMI issuance.
It said, “In the 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.
“This framework is being issued in line with the mandate of the commission to regulate the capital market with the objective of ensuring the protection of investors, maintaining fair and efficient market as well as reduction of potential systemic risks in trading, clearing and settlement ecosystem.”
The SEC urged securities exchanges and CSDs to comply with the rules and regulations guiding the framework and also to publish them on their websites.