NGX collaborates with Euroclear to create dollar settlement platform for tech startups

The Nigerian Exchange Limited (NGX) has announced a strategic collaboration with Euroclear and the Central Securities Clearing System (CSCS) to develop a dollar settlement platform specifically designed for tech startups. This groundbreaking initiative seeks to facilitate greater access to capital for local companies and foster the growth of the Nigerian economy.

The establishment of this dollar settlement platform comes as a response to the challenges faced by fintechs and tech startups in raising capital. Although public markets have traditionally served as viable options, these ventures often prefer private market placements due to the regulatory rule of disclosure and stricter governance requirements associated with public listings.

Speaking at the Annual A&O Fintech webinar, Jude Chiemeka, Divisional Head, Capital Markets, NGX, highlighted the need for a more conducive environment for capital formation amongst tech firms. He explained that NGX had obtained approval from the Securities and Exchange Commission (SEC) to introduce a technology board specifically tailored for fintechs and tech companies to raise capital in the local currency.

By offering a local currency fundraising channel, the technology board aims to incentivize tech firms to enter the market and tap into domestic investor capital. Chiemeka emphasized that this initiative is especially relevant in the current high interest rate environment, which has made foreign investors more cautious.

This collaboration between NGX, Euroclear, and CSCS will enable domestic investors to have the opportunity to invest in tech startups and contribute to the development of the Nigerian economy. By democratizing capital formation, the dollar settlement platform will promote inclusive growth and empower local investors to participate in the success of these innovative ventures.

The partnership with Euroclear, a leading international central securities depository, ensures secure and efficient settlement processes for transactions conducted on the platform. Euroclear's expertise in post-trade services, combined with CSCS's role as the clearing, settlement, and depository for NGX, will guarantee seamless and reliable dollar settlements.

Furthermore, the collaboration between NGX and Euroclear serves as a testament to the growing recognition of Nigeria's fintech and tech sectors on the global stage. By providing tech startups with a dedicated platform for raising capital, Nigeria is positioning itself as a hub for innovation and entrepreneurship in Africa.

In conclusion, the collaboration between NGX, Euroclear, and CSCS to create a dollar settlement platform for tech startups is a transformative development for Nigeria's capital markets. This initiative not only addresses the challenges faced by fintechs in raising capital but also allows domestic investors to directly participate in the growth of the Nigerian economy. With the launch of the technology board, NGX aims to foster a supportive environment for tech firms and encourage them to access capital in local currency, ultimately driving economic growth and positioning Nigeria as a leading player in the global fintech ecosystem.

Source of content: OOO News 2023-08-11 News

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