Months after Central Bank of Nigeria (CBN) banned cryptocurrency trading in the country, the country’s Securities and Exchange Commission (SEC) has warns Nigerians against Fintech platforms who facilitate trading on foreign stocks.
Securities and Exchange Commission (SEC) warned investing public on the proliferation of unregistered online investment and trading platforms facilitating access to trading in securities listed in foreign markets.
According to a statement on Thursday evening, SEC described the platforms as illegal, and warned capital market operators to stop giving support to the online investment trading platforms.
These trading platforms include Chaka, Trove, Bamboo, and Risevest among others. These platforms offer Nigerians access to stocks, bonds and other securities in both local and international markets. They have in recent years grown in popularity in Nigerian fintech space, especially amongst young people.
The investment platforms have worked with local and foreign brokerage firms to provide the services, in a way sidestepping the difficult task of obtaining SEC approval.
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SEC’s statement reads;
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.
The move comes months after Central Bank of Nigeria barred banks from allowing cryptocurrency-related transactions in the country.
In quick reaction to the statement, the CEO of Bamboo, Richmond Bassey, promised users that their assets are safe and easily accessible, and they are already in discussions with the SEC and their broker partners to ensure that the interests of their users are fully protected.
While Tosin Osibodu, Co-founder and CEO, Chaka Technologies, also assured its users that they have taken the necessary steps to register with SEC.
The apparent move by the SEC to bar fintechs from selling, issuing or offering for sale foreign securities not listed on any exchange registered in Nigeria, if seen through, will negatively impact thousands of Nigerians who have lately been drawn by technology to investing in foreign securities.
In December 2020, SEC tackled Chaka by accusing the platform of engaging 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.
