The Nigeria Securities and Exchange Commission has banned the trading of unregistered foreign securities.
In a statement issued on Thursday, the securities said their attention had been drawn to the existence of several providers of online investment and trading platforms that 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.
In recent years, Nigeria has witnessed the emergence of technology companies that ease access to foreign and local stock markets for the average Nigerian.
Tech companies like Bamboo, Trove, and Chaka came into the game through strategic partnerships with existing Capital Market Operators (CMOS) in the US and Nigeria and have been offering people access to bonds and securities in both local and international markets.
The securities commission banned the trading of foreign stocks that are not listed in the Nigeria securities exchange and advised all platforms facilitating the trade to stop.
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
Nigeria’s SEC Dispute with Chaka
This development follows the recent dispute between the SEC and investment tech platform Chaka Investment Technologies.
Earlier in December 2020, the SEC published a surprising memo that stated that Chaka would be restricted from offering stocks to the public.
The wording of the memo highlighted that regulations would soon be coming for other investment-tech platforms. At the time, Tosin Osibidu, CEO of Chaka, echoed this sentiment and called for everyone to be prepared and meaningfully engage.
On February 11, 2021, the regulator confirmed its intent to place regulations on online platforms offering securities to the average citizen.
However, on March 26, 2021, Chaka announced that it had taken the necessary steps to register with the SEC for a newly created licence for online investment companies.
Following the SEC’s recent ban, all other platforms will also have to secure their licenses with the securities commission.
The Commission has advised 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.