LG Allocation: SEC moves to strengthen framework for government, corporate borrowing

The Securities and Exchange Commission (SEC) has said it is ready to improve the regulatory framework on borrowing by governments and corporates.

Emomotimi Agama, director general of the commission, announced this during an interview, saying that the action became important because of the role that borrowing plays in the stability and functionality of the financial system.

He said, “Improving the framework for borrowing is very important because borrowing is part of the financial system and we can only make much of the move we want to make if there is enough funding. Hence, we want to be sure of sustainability in both government borrowing, municipal and state governments, particularly with the new Supreme Court order regarding the 774 local government areas receiving direct subvention from the Federal Government.

“It therefore becomes important that we have in the management of such resources via strategic and focused borrowing to help the developments in those sectors.”

For corporates, the SEC DG said that new rules, which will be functional this year, are being introduced by the commission on Central Counter Parties (CCPs) to allow for seamless and effortless borrowing process for Nigerian companies.

“It is very important that as we drive the growth of the Nigerian capital market, we also drive new products and new opportunities for every Nigerian. Nigeria for a long time has been seen as a mono product market, but the year 2025 will be different because we will continue to drive the process of introducing derivatives into the capital market.

“That is not possible without the laws and regulations that will help us do this better. To build confidence in derivatives trading, we hope to provide a clear direction of these transactions. To build confidence in derivatives trading, we aim to provide a clear exemption of these transactions from general insolvency laws, creating a safer and more predictable trading environment,” he stated.

Agama said that the commission is working to establish a secure trading environment, foster trust, and draw in additional market participants. Hence, it must provide enabling regulations and laws.