- Investment platforms seek more regulatory clarity from SEC
Charles Abuede
Online securities and investment trading platforms such as Trove, Bamboo, Chaka and Risevest, domiciled in Nigeria to offer the Nigerian public the unfettered access to securities of foreign and local companies listed on the Nigerian Stock Exchange and some on the international bourses will experience difficult times operating in Nigeria following the new circular issued by the Securities and Exchange Commission (SEC) which declares these platforms illegal and also calling on capital market operators who deal with these platforms to desist from the act.
The Securities and Exchange Commission as a regulatory body on Thursday, in a circular tagged “Proliferation of Unregistered Online Investment and Trading Platforms Facilitating Access to Trading in Securities Listed in Foreign Markets” issued on its website stated that in accordance with the Investment and Securities Act (ISA) of 2007, only foreign securities listed on any Exchange registered in Nigeria may be issued, sold or offered for sale or subscription to the Nigerian public.
“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 by SEC places these trading platforms on a hold and investors funds frozen; regardless, these operators are likened to have been in compliance with all local laws and regulations; maintained good standing with all existing compliance requirements and regulatory frameworks.
Meanwhile, some platforms such as Trove and Bamboo have assured their traders of their funds and equities safety and security as they seek to resolve the issue with further clarifications from SEC.
In a brief statement from Trove, an online trading and investment platform that allows for trades in local and foreign equities listed on the local and international bourses, it stated that:
“Our attention has been drawn to the SEC circular that was recently issued.
Please be aware that we are and will remain committed to being in compliance with all local laws and regulations. We have always maintained good standing with all existing compliance requirements and regulatory frameworks.
“Be rest assured that your funds and equities are safe and secure with Trove.
“Since the memorandum, we have been liaising with the SEC to get more clarity on the circular. We are also engaging with top-level executives at our local partner brokers. Additionally, we have involved legal professionals to manage the ongoing mediation.
“From all indications, we anticipate everything would be resolved. Kindly note that your US funds and equities are held in custody by Drivewealth LLC, a regulated broker-dealer in the US and protected by the SIPC, for up to $500,000.
“You can continue your trading activities as normal as we are still fully capable of carrying out our responsibilities as usual.
“Be rest assured that we are on top of all the happenings and would actively communicate with you all as things progress,” Trove writes.
