SEC warns Nigerian fintechs against trading foreign stocks

Nigeria’s Securities and Exchange Commission (SEC) has warned unregistered investment-tech platforms to desist from offering foreign securities to Nigerians.

SEC in a statement on Thursday said that only registered exchanges may issue, or sell foreign securities to the Nigerian public.

Nigeria has witnessed the emergence of technology companies that are easing access to foreign and local stock markets for the average Nigerian. Such fintechs include Bamboo, Chaka and Rise.

These platforms have grown in popularity among the middle class and provide a haven to protect earnings from naira devaluations.

SEC statement means these investment platforms will have their work cut out and might only offer individuals access to only local stocks and securities, affecting the business models of these startups.

“We are still able to carry out all our operations and will continue to do so,” Bamboo said in an email statement to their customers on Friday.

“By opening a Bamboo account, you have also opened an account with our US broker partner, DriveWeath LLC. DriveWealth is licensed by the U.S. Securities and Exchange Commission and is also a member of the Financial Industry Regulatory Authority (FINRA) and the U.S. Securities Investor Protection Corporation (SIPC),” the platform added.

Another affected fintechs, Rise, in an email told its customers not to be alarmed, noting that it does not aide direct trading of stocks by its customers.

“Fintech is still in its nascent stages in Nigeria and it is the job of the SEC to protect public investors just as it is our duty to help you invest legally and safely,” Rise said on Friday.

“Rise has always made sure that we are in full compliance with all regulatory requirements and the recent announcement from the SEC is no exception.”

“We do not enable the direct trading of stocks by individuals,” Rise said its email on Friday, adding that it is “in touch with all the relevant stakeholders to ensure that we continue to stay on the right side of regulations.”

SEC had in February said it would place regulations on online platforms offering securities to the average Nigerian.