TUE 10 AUG, 2021-theGBJournal- The Securities and Exchange Commission, Nigeria Tuesday announced the receipt of a grant from the African Development Bank Group (AfDB) administered/Capital Markets Development Trust Fund to finance the Risk Based Supervision Framework Implementation and Capacity Development Project.
The principal objectives of the project, according To SEC, is to provide technical assistance and capacity building on selected areas of the Commission’s operations, support implementation of Risk-Based Supervision framework, improve the Securities Markets regulatory environment and broadening of market instruments that will help deepen the Capital Markets in Nigeria, strengthen the Commission’s supervisory tools as well as its capacity to achieve its mandate of investor protection and minimizing systemic risk.
Risk-based Supervision Framework Implementation involves the development of best practice risk-based supervision inspection manuals, tools and guidelines for the market.
There is a component for Institutional capacity building on regulation of derivatives. The aim is to enhance the technical and regulatory capacity of staff of the Commission in the area of derivatives which is relatively less developed segment of the Nigerian capital markets. It will also involve the development of operational guidelines on derivatives trading (surveillance and inspection manuals for derivative trading and clearing as well as frameworks for standardized OTC derivative contracts) and benchmarking with global best practices and in context of the local market.
SEC noted that the use of derivatives in financial markets has grown rapidly in response to the need to manage risk in a complex financial environment. Derivatives are instrumental in portfolio risk management and an important instrument for stimulating secondary market development.
The project also includes Capacity building on Green Bonds and Financial Audit. The Financial Audit component, according to SEC, ‘’will focus on providing financial audit service for the entire grant utilization programme consisting of all the above listed components,’’ while the Capacity building on Green Bonds will focus on in-house capacity building and training for staff of the Commission and the Nigerian Exchange Group (NGX) to strengthen their capacity to oversee regulation, registration, listing, trading, verification, monitoring among others, for green bonds and green finance; development of tailored framework for standardized green bond offerings; guidelines to enable regulatory review and processing of green bond offerings as well as templates for efficient post offer monitoring and inspection of green bond issues; and capacity building for market operators.
The amount received from the AfDB was not specified.
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