Business and Economy

SEC Issues Interoperability Framework For Central Securities Depositories

The Securities and Exchange Commission, SEC, has issued an Interoperability/Financial Markets Infrastructure Link Framework among Central Securities Depositories to enhance the efficiency of trading and settlement functions as well as align the market with international best practices. 

This was stated by the Management of the Commission in Abuja weekend. 

Interoperability means the technical and/or legal compatibility that enables a system or mechanism to be used in conjunction with other systems or mechanisms. 

According to the SEC, the Nigerian capital market has witnessed remarkable growth in the last few years in terms of size, market participants and tradable instruments. 

This has impacted the market structure in terms of composition and interconnectedness. In the secondary market particularly, there are currently multiple trading platforms and Financial Market Infrastructures (FMIs) which provide comparative services in depository, trading, clearing and settlement activities. 

“Consequently, Interoperability arrangement has become necessary in order to enhance the efficiency of trading and settlement functions as well as aligns the market with international best practices. 

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


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