FMDQ says new CAMA will change Nigerian financial markets

FMDQ Securities Exchange on Monday said the new Companies and Allied Matters Bill 2020 asserted to by President Muhammadu Buhari would reposition Nigeria as a compelling destination of capital.

Mr Bola Onadele, FMDQ Group Chief Executive Officer, said in Lagos that the country’s financial market and the economy would receive the long-awaited boost to spur economic development with the new CAMA.

It was reported that Buhari on Aug. 7 in Abuja assented to the CAMA Bill, 2020 recently passed by the National Assembly.

The Bill, now Companies and Allied Matters Act, 2020, repeals and replaces the extant Companies and Allied Matters Act, 1990, and introduces several corporate legal innovations aimed at enhancing ease of doing business in the country.

Some of such innovation are reduction in filing fee and other reforms to encourage small and medium enterprises; provisions for the establishment of private companies with a single shareholder and limited liability partnerships and limited partnerships, among others.

Onadele said the new CAMA, when implemented, would usher in a new wave of innovative developments in the Nigerian financial market and as well improve the ease of doing business in the country.

“With the increasing sophistication of the global financial markets comes the need for domestic markets to develop their architecture and infrastructures to support requisite advancement as well as align with international standards, and the new CAMA 2020 will position Nigeria and its capital market at par with its international counterparts.

“Chief of the several impactful provisions in the CAMA 2020, is the inclusion of netting and bankruptcy remoteness provisions which signal the birth of a new financial market in Nigeria.

“The CAMA 2020 commendably sets the tone for the actualisation of key innovations in the market, providing enabling legal backing for netting, bankruptcy remoteness and attendant regulatory frameworks for the smooth functioning of financial markets in Nigeria,” Onadele said.

He noted that these game changing provisions would cure critical legal deficiencies that hitherto affected the development of the financial markets.

Onadele said that the netting provisions in the CAMA would address the credit risk challenges, operational and legal bottlenecks of gross settlement for spot and derivatives transactions.

“The Act is instrumental, in no small measure, to the successful takeoff of the derivatives market in Nigeria, a much-desired development, which will provide, amongst others, a wide range of risk management opportunities,” he added.

He said the derivatives market would enhance market liquidity, improve price discovery, reduce risk capital charges and transaction costs as well as increase financial markets stability.

Onadele said, “FMDQ Clear, Nigerian’s first central clearing house (CCH), is well positioned to providing the much-needed central counterparty services, upon regulatory approval, and has proactively set aside a default resolution reserve with a near-term target of ₦20 billion.”