NGX partners CSCS, Euroclear to establish dollar settlement platform

By Cynthia Ezekwe.

The Nigerian Exchange Limited (NGX)  has announced a collaboration with the Central Securities Clearing System (CSCS) Plc,  and Euroclear to create a dollar settlement platform that will enable tech startups to raise capital in dollars.

Jude Chiemeka,  the divisional head, capital markets, NGX, made this known during the annual A&O Fintech webinar, tagged, ‘‘Fueling Fintech: The Power of Capital, the Role of Regulation.’’

Chiemeka noted that while public markets were viable options for raising capital, fintechs had opted for private markets because of regulations of disclosure and stricter governance requirements that were necessary for listing publicly.

He  explained that to address this issue, NGX received approval from the Securities and Exchange Commission (SEC) to launch a technology board for fintech and tech companies to raise capital.

Chiemeka  pointed out that the tech board is geared at encouraging tech firms to come to the market and raise capital in local currency, which would prove beneficial amid the high-interest rate environment that had made foreign investors hawkish.

“NGX is working with CSCS and Euroclear to create a dollar settlement platform that allows tech companies (start-ups or existing ones) to raise capital in dollars. 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 relaxed to catalyse these listings,’’ the divisional head said.

According to Chiemeka,  the partnership would create opportunities for domestic investors to have access to their shares and at the same time contribute to the growth of the Nigerian economy through democratisation of capital formation.

While stating that the issue of settlements may discourage fintech from accessing capital in US dollars on the public market, Chiemeka disclosed  that the Exchange was working on a partnership that is directed at fixing that problem.

He implored the present administration to create  deliberate and enabling policies to drive listings on the exchange’s platform.

“The government needs to be deliberate on policies that will encourage corporates to list. Now that it is thinking of creating palliatives due to the removal of subsidy, they can also consider those that will incentivise companies to list and see the domestic capital markets as choice platforms to raise capital,’’ he added.