In a circular released by Nigeria’s capital market regulator SEC, investment platforms offering entry to foreign securities is perhaps treading on harmful grounds. According to the SEC new rules, these platforms are trading foreign securities not registered within the nation and have been warned to stop doing so. Capital market operators in partnership with them have additionally been warned to renege on offering such companies.
Over the previous three years, Robinhood-esque platforms like Bamboo, Trove, Chaka and Rise have sprung forth within the Nigerian fintech house. They supply Nigerians entry to shares, bonds and different securities in each native and worldwide markets. These platforms have scaled among the many center class and have grown in recognition, offering a haven to shield earnings from naira devaluations.
That stated, there’s an unlimited distinction in how they function compared to Robinhood. In addition to being a trading app, Robinhood affords on-line brokerages (introducing and clearing) and likewise zero fee trading. Nigerian investment platforms don’t, and it may be a Herculean activity to receive a brokerage license from the SEC. This is the place capital market operators (native and foreign brokerage corporations on this case) come into play, forming strategic partnerships with these corporations so Nigerians can entry each native and foreign fractional securities.
Last yr, the SEC singled out Chaka, one of many platforms accused of promoting and promoting shares. The regulator’s definition of the alleged offence was that Chaka “engaged in investment activities, including providing a platform for purchasing shares in foreign companies such as Google, Amazon, and Alibaba, outside the Commission’s regulatory purview and without requisite registration.”
The firm’s CEO, Tosin Osibodu, denied any wrongdoing. And because the flip of the yr, not a lot has been heard from the SEC and Chaka relating to this matter till the discharge of as we speak’s round. Unsurprisingly, the regulator continued from the place it left off, solely this time, all investment platforms together with brokerage corporations — not simply Chaka — are concerned. SEC’s refined directive is to stop promoting, issuing or providing on the market any foreign securities not listed on any change registered in Nigeria.
Here’s the knowledge launched by the regulator as seen on its website:
The consideration of the Securities and Exchange Commission (the Commission) has been drawn to the existence of a number of suppliers of on-line investment and trading platforms which purportedly facilitate direct entry of the investing public within the Federal Republic of Nigeria to securities of foreign corporations listed on Securities Exchanges registered in different jurisdictions. These platforms additionally declare to be working in partnership with Capital Market operators (CMOs) registered with the Commission.
The Commission categorically states that by the provisions of Sections 67-70 of the Investments and Securities Act (ISA), 2007 and Rules 414 & 415 of the SEC Rules and Regulations, solely foreign securities listed on any Exchange registered in Nigeria could also be issued, bought or supplied on the market or subscription to the Nigerian public. Accordingly, CMOs who work in live performance with the referenced on-line platforms are hereby notified of the Commission’s place and suggested to desist henceforth.
The Commission enjoins the investing public to search clarification as could also be required by way of its established channels of communication on investment merchandise marketed by means of typical or on-line mediums.
This is a growing story. More to comply with…