Jessica Martinez
Sat, Aug 12, 2023 12:45 PM

NGX and Euroclear Partner to Create Dollar Settlement Platform for Tech Startups

BusinessEarn Max 30 Coins💰 Get coins immediately after reading this article

NGX and Euroclear Partner to Create Dollar Settlement Platform for Tech Startups
NGX is collaborating with Euroclear and the Central Securities Clearing System to establish a dollar settlement platform for tech startups in Nigeria. This platform aims to facilitate capital raising in dollars for fintech and tech companies, creating opportunities for domestic investors and contributing to the growth of the Nigerian economy. The collaboration addresses regulatory hurdles, high interest rates, and the need to incentivize companies to list on the local capital markets.

Nigerian Exchange Limited (NGX) is partnering with Euroclear and the Central Securities Clearing System (CSCS) to develop a dollar settlement platform specifically designed for tech startups in the country. This strategic collaboration aims to enable fintech and tech companies to raise capital in dollars while also providing domestic investors access to shares, promoting capital formation, and contributing to the growth of the Nigerian economy.

Traditionally, tech startups have preferred private markets for capital raising due to regulatory obligations and stricter governance requirements associated with public listings. However, NGX has obtained approval from the Securities and Exchange Commission (SEC) to launch a technology board that eases the listing process for fintechs and tech companies.

The tech board intends to encourage tech firms to tap into the local capital markets and raise capital in the local currency, particularly given the high interest rate environment that makes foreign investors cautious. However, settlements in US dollars may discourage fintechs from accessing capital through the public market. To address this concern, NGX is working with CSCS and Euroclear to create a dollar settlement platform tailored to the needs of tech companies, both startups and existing ones.

In addition to the establishment of the dollar settlement platform, NGX has also relaxed listing requirements for tech companies. Parameters such as the number of shareholders and minimum years of operation have been adjusted to stimulate more tech listings on the exchange.

The prevailing high interest rate environment has led domestic investors to allocate their Assets under Management (AuM) primarily to FGN bonds, resulting in more outflows than inflows from Foreign Portfolio Investors (FPIs). This situation has impacted the performance of equities in recent times, contributing to lower transaction volumes and values.

In light of these challenges, Jude Chiemeka, the Divisional Head of Capital Markets at NGX, highlighted the need for deliberate and enabling policies from the government to drive listings on the exchange's platform. Chiemeka stressed the importance of incentivizing companies to list by offering policy measures alongside the removal of subsidies, particularly ones that support corporates and encourage them to consider domestic capital markets as viable options for capital raising.

He emphasized that publicly traded companies not only contribute more taxes but also adhere to better governance practices, suggesting potential upsides for the government in fostering more listings. Such initiatives would also attract institutional investors and enhance domestic capital markets as attractive choices for raising capital.

Source of content: OOO News 2023-08-12 News

More detailed, more comprehensive, fresher news, please visit OOO NEWS.

Share content to earn coins