The securities exchange of the future will be characterised by new revenue streams, more efficient operations, and a symbiotic network of ecosystem partners made possible by emerging digital shifts, said Temi Popoola, CEO, of Nigerian Exchange Limited (NGX).
He noted that transformation is being enabled by a portfolio of emerging technologies that address current front-and back-end challenges while also making exchanges “future-ready”.
Popoola, while speaking on the “Role of Digital Technology in the Nigerian Capital Market” at the Institute of Capital Market Registrars (ICMR) 2022 annual conference noted that securities and futures exchanges pursue better margins and improved shareholder value.
“Global securities and futures exchanges have heavily invested and continue to invest in technologies to support high-frequency trading, colocation venues, and direct market access for trading partners,” he added.
The eleventh annual conference of ICMR was themed “Sustainability of the Nigerian Capital as a Catalyst for Economy Growth and Prosperity”. Stakeholders at the conference noted the need to entrench proper identity management mechanism in the nation’s capital market to boost investment.
“We are seeing evidence of investments in technologies to support high frequency trading, colocation venues, and direct market access for trading partners. As securities and futures exchanges pursue better margins and improved shareholder value, we are seeing evidence of investments in technologies to support high frequency trading, colocation venues, and direct market access for trading partners.
“Not keeping pace are digital improvements to exchanges’ nontrading operations; many functions remain dependent on spreadsheets, manually intensive operations, and a limited control environment.
“Exchanges that automate these nontrading operations as part of a larger digital transformation may gain significant benefits, including increased efficiency for traditional trading activities, a reduced operational footprint, and support for future growth via alternative mechanisms for revenue generation and an enhanced customer experience,” Popoola said.
“However, digital improvements to nontrading operations are lagging. Exchanges that automate nontrading operations as part of a larger digital transformation may gain significant benefits, including increased efficiency, reduced operational footprint, and support for future growth.
“The exchange of the future will be characterised by new revenue streams, streamlined operations, and a symbiotic network of ecosystem partners made possible by emerging digital shifts,” Popoola said.
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“Over the past few years, some global exchanges have embarked on digital transformation journeys to reshape their business models, redefine and refresh the customer experience, support new product and service offerings, and strengthen regulatory compliance,” he said.
He identified key focus areas for technology enablement. They include: (i) Reduce manual operations – automate processes through digital interventions across member onboarding, payments, and listings; (ii) Provide data on demand – Develop models that provide data and information to help clients make efficient trading decisions and better manage capital; (iii) Reduce latency for various services – Minimise turnaround time for high-volume activities, including risk and regulatory reporting; (iv) Launch digital products and services – Reduce time to market for blockchain, chatbots, and other offerings; (v) Access global exchanges -Partner to provide additional benefits for companies, such as dual listing and increased investor reach; (vi) Enhance market surveillance – Better identify market manipulation, fraud, and compliance issues with minimal manual intervention.
The keynote speaker, Biodun Adedipe, Chief Consultant, BAA Consult noted that “An efficient capital market can play a useful role in resource mobilisation and allocation for sustainable growth and development. He noted in his presentation titled “Sustainability of the Nigerian Capital Market as a Catalyst for Economic Growth and Prosperity” that “The common assumption that the stock market and the economy move in concert has weakened in recent times, especially with the Covid-19 pandemic. Movements in the market and the economy are synchronized for a while and then they diverge!”.
“Sustainability is taking the people and planet along in the pursuit of profit. The stock market is often argued as a leading economic indicator and thus a predictor of a recession or economic recovery. This notion developed strongly in the historical data analysis of global financial crisis by International Monetary Fund (IMF), which demonstrated GDP contraction by 4percent whenever the stock market dampens.”
He acknowledged that the stock market and the real economy may not move together at the same time if investors think that something might change in the future. “This indeed, has been the case in Nigeria, with stock index changes and GDP growth rate poorly and negatively correlated: -0.03percent, using data from Q1’2013 to Q3’2022,” Adedipe said.
In his presentation on “Tackling the identity management issues in the Nigerian Capital Market”, Ademola Aladekomo, chairman of Chams Plc noted the need for public confidence to be restored in the capital market.
Identity theft is the deliberate use of someone else’s identity, usually as a method to gain financial advantage or obtain credit and other benefits in the other person’s name, and perhaps to the other person’s disadvantage or loss.
“Identity seems to be the least of our worries. BVN and NIM already solved identity-based issues. With pension, foreign, and other funds and good attention to implementation of the Tech Board, highly valued securities can excite the market,” he said.
