SEC directs capital market operators to implement ERM framework
The Securities and Exchange Commission has mandated all capital market operators to implement an Enterprise riskManagement Framework that aligns with internationally recognised standards.
This was disclosed in a statement made available to Nigerian NewsDirect.
According to the SEC, these standards include those set by the Committee of Sponsoring Organisations of the Treadway Commission, the International Organisation for Standardisation and the Financial Action Task Force Recommendations.
It added that this initiative aims to bolster risk management practices within the capital market, minimise systemic impacts, and safeguard stakeholders’ interests.
“All capital market operators are hereby directed to implement an enterprise risk management framework that conforms to international standards such as the Committee of Sponsoring Organisations of the Treadway Commission, the International Organisation for Standardisation (ISO 31000), Financial Action Task Force Recommendations and any other internationally recognised risk management standards.
“Adoption of comprehensive risk management practices is imperative for minimising systemic impact and safeguarding the interests of all stakeholders,” it explained.
According to the commission, the new ERM framework requires CMOs to consider their operational structure, business activities, client demographics, products, services, and delivery mechanisms.
It noted that the framework must include a comprehensive risk governance structure with clear roles and responsibilities, including the establishment of a risk management committee.
To ensure accountability and oversight, the SEC directed CMOs to define their risk appetite, tolerance statements, and consistent reporting to senior management and the board of directors.
It added that organisations must implement risk-awareness programmes to cultivate a culture of risk management throughout their operations.
“This directive is aimed at strengthening the implementation of risk-based supervision, including anti-money laundering and counter-terrorism financing measures in the capital market.
“Consequently, all CMOs are required to submit a Board-approved risk management policy (selectable and searchable PDF format) on or before September 30, 2024, via email at [email protected] to obtain a ‘No Objection,” it stated.
The commission noted that the directive was part of its broader strategy to enhance risk-based supervision in the capital market, including measures for anti-money laundering, countering the financing of terrorism, and countering proliferation financing.
It also asked CMOs to submit an annual risk profile by January 31 of each year.
“Every CMO is required to submit their annual risk profile no later than January 31. In addition, emerging threats and measures put in place to mitigate them must be assessed and reported to the Commission for review,” it declared.
