Nigerian Exchange To Set Up A Dollar Settlement Platform For Fintechs
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The Nigerian Exchange Limited (NGX) has partnered with the Central Securities Clearing System (CSCS) Plc and Euroclear for a dollar settlement platform. This platform will allow startups in the tech industry to secure capital in dollars.
Nigerian Exchange to create a dollar settlement platform
NGX said that while public markets were ideal options for raising capital, private markets were filing this gap because of the regulatory guidelines on disclosure and strict governance requirements needed for public listings.
The divisional head at Capital Markets, Jude Chiemeka, commented on the development saying that the exchange would be working on a dollar settlement platform that tech companies can use to raise funding in dollars. This settlement platform will be created in partnership with CSCS and Euroclear.
“We have reviewed listing procedures for tech companies who want to list, Requirements around the number of shareholders, and years of operation, among others, have been realized to catalyze these listings,” Chiemeka said.
The Nigerian Exchange also said that the move would set up new opportunities needed by domestic investors. According to the platform, these investors will also have access to shares while contributing to the growth of the Nigerian economy by making capital information available to all.
Chiemeka also said that NGX obtained the necessary approval from the Securities and Exchange Commission for this offering to have a technology platform used by fintech and tech companies to secure funding.
High-interest rates create a hawkish environment
The executive also said that the tech board would encourage tech companies to enter the market and raise funding in local currency, which will add value amid the high-interest rate environment that has triggered a hawkish outlook.
Chiemeka also said that the issue of settlements might result in fintechs not accessing fintechs not accessing capital in US dollars across the public market. He also noted that the Exchange used this partnership deal to fix this issue. The high-interest rates led domestic investors to allocate Assets Under Management to FGN bonds.
He further said that the market had witnessed an influx of outflows compared to inflows from FPIs, which affected the performance of equities regarding volumes and the value of transactions. He has also urged the administration to set out policies to support exchange listings.
He has urged the government to be deliberate on its policies by encouraging corporate entities to list. He further said that with the government setting up palliatives after subsidy removal, there should be considerations on incentivizing companies on listings while ensuring domestic capital markets were an ideal choice to secure funding.
Chiemeka also said publicly traded companies make more tax payments and have better governance. Therefore, there were more benefits to the government if more listings were secured. The initiative will also encourage institutions to pursue local markets.
