Over the years, Robinhood-like platforms like Bamboo, Trove, Chaka and Rise have sprung forth in the Nigerian financial technology space.
These companies offer access to fractional stocks, bonds and other securities in both local and international markets. The platforms have grown in popularity among Nigerians and provide a means to protect wealth from the hyperinflation of the Naira.
In a circular released by the Nigerian Security and Exchange Commission on Thursday, The SEC directed these firms to stop selling, issuing or offering for sale any foreign securities not listed on any exchange registered in Nigeria. This means that going forward, these platforms might have to offer individuals access to only local stocks and securities or find a way to work with the Nigerian SEC to legitimize their operations like Chaka was able to do few days ago.
Here’s the information released by the regulator as seen on its website:
The attention of the Securities and Exchange Commission (the Commission) has been drawn to the existence of several providers of online investment and trading platforms which purportedly facilitate direct access of the investing public in the Federal Republic of Nigeria to securities of foreign companies listed on Securities Exchanges registered in other jurisdictions. These platforms also claim to be operating 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, only foreign securities listed on any Exchange registered in Nigeria may be issued, sold or offered for sale or subscription to the Nigerian public. Accordingly, CMOs who work in concert with the referenced online platforms are hereby notified of the Commission’s position and advised to desist henceforth.
The Commission enjoins the investing public to seek clarification as may be required via its established channels of communication on investment products advertised through conventional or online mediums.
Victor Nnadi is an Independent Economics Researcher and a Securities Trader.
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