By Tony Obiechina, Abuja
The Securities and Exchange Commission (SEC) has stated that it will continue to engage players in the Fintech space and support them to operate lawfully in a bid to ensure the delivery of safe products and services without stifling innovation.
Mr. Lamido Yuguda who stated this at a post Capital Market Committee Meeting press briefing webinar held Thursday, said the recent Circular was issued by the Commission in its desire to ensure that only fit and proper persons continue to operate in the capital market.
According to Yuguda, “It became imperative for the Commission to issue this notice for the protection of investors and to preserve the sanctity of the Nigerian Capital Market as only registered capital market operators are permitted to intermediate in the Nigerian Capital Market and only through approved channels.
“We do not want any unregulated entity to participate in the market because if there are issues it becomes very difficult to resolve.
“The Commission recognizes the impact of FinTechs on capital market activities, and wishes to assure the public that we remain accommodative of this development. We shall continue to engage players and support them to operate lawfully. Our aim is to ensure the delivery of safe products and services without stifling innovation, I therefore encourage FinTech firms to approach the Commission for due registration and desist from operating illegally.
“In the same vein, registered CMOs are advised to refrain from providing any form of support to unregistered entities operating unlawfully within our market, as such action would not be condoned. Furthermore, we urge CMOs to improve on their level of compliance, timeliness and correctness of disclosures and other filings made to the Commission”.
The DG disclosed that the Commission is also mindful of developments in the crypto asset space adding that following initial warnings to the public, the SEC undertook a process to further understand this class of assets, including setting up Fintech and Blockchain Committees and releasing a “Statement on Digital Assets and their Classification and Treatment” in September, 2020.
“Subsequently the CBN directed its regulated institutions to close bank accounts of crypto exchanges to protect the financial system from abuse. We are in discussions with the CBN on how to better understand and regulate the market, given the need to take advantage of the emerging innovations while protecting investors and the financial system” he stated.
On e-dividend, the SEC Boss said that as the Commission works towards resolving any legacy issues with unclaimed dividends, all stakeholders are implored to comply with all directives of the Commission in this regard, as defaulters would be sanctioned appropriately
“There is no reason why there will be unclaimed dividends for new investors or newly-listed companies adding every investor should be promptly paid his/her dividends upon declaration and payment.
“The Commission has observed that certain Capital Market Operators (CMOs) frustrate the e-dividend mandate process. We have observed that the growth in the number of mandated accounts has been on the decline for some time. The Capital market community has directed its e-Dividend Committee to engage with the Committee of Heads of Banking Operations to encourage better cooperation from banks as we tackle the challenges of unclaimed dividends”.
Yuguda said the Commission has exposed new rules on implementation of the e-dividend mandate and treatment of unclaimed dividends adding that the Commission is monitoring compliance and will not hesitate to sanction erring operators.
He said the past year was challenging for the Nigerian economy, largely due to the effects of the pandemic. Despite a positive GDP growth of 1.87% recorded in the first quarter, negative growths in the second and third quarters led to a recession, with the economy finally closing the year at a negative GDP growth rate of -1.92%.
On the state of the capital market, the DG said in a pattern similar to many other markets across the globe, the Nigerian capital market suffered a major decline at the beginning of the second quarter of 2020 as a result of the announcement of a lockdown.
“However, the market recovered thereafter, ending the year 2020 with positive growth. So far this year, market performance has been mixed, but with a generally positive outlook, especially as economic activities resume fully and COVID-19 vaccination gains wider acceptance.
“We have continued to support initiatives towards ameliorating the impact of the pandemic, especially through our Capital Market Support Committee on Covid-19. The Commission is at the mid-point of the ten-year implementation journey of the Capital Market Master Plan (CMMP)and has commenced a review to update the assumptions and vision elements of the Plan to align with current realities” Yuguda said.
He disclosed that between the last meeting and now, the Commission has released a number of new rules to ensure proper regulation and development of our market. These include rules on warehousing and collateral management, crowdfunding, fund management products and nominee companies. It is important that market operators are familiar with these rules and other rules and regulations of the Commission.
Yuguda said the Commission recently reintroduced periodic renewal of registration by Capital Market Operators saying that the rationale is to have reliable data on all active CMOs and strengthen their supervision and monitoring. The renewal process is electronic and the deadline for 2021 renewal is 30th April, 2021.
The DG reiterated that the Commission takes seriously the level of compliance, timeliness and correctness of disclosures made by CMOs as henceforth, appropriate sanctions will be imposed for non-compliance.