SEC commences regulatory incubation For fintechs

By Cynthia Ezekwe

The Securities and Exchange Commission (SEC) has opened a regulatory incubation programme for fintech firms operating or seeking to operate in the Nigerian capital market.

 This was contained in a  circular released by the commission which noted that the regulatory incubation programme is designed to address the needs of new business models and processes that require regulatory authorisation to continue carrying out full or ancillary technology-driven capital market activities.

The circular identifies those that can apply as registered capital market operators, unregistered fintech innovators that require regulation, firms of all sizes and firms that want to enhance investor participation in the Nigeria capital market.

According to the circular, the portal for the programme would be opened from  28   April 2023 to 26 May 2023 to registered capital market operators.

SEC disclosed that the move to open a portal comes from a 2021 circular where the commission announced the imminent roll-out of the SEC regulatory incubation programme for fintechs operating or seeking to operate in the Nigerian Capital Market.

The commission further noted that the incubation programme has been conceived as an interim measure to aid the evolution of effective regulation which accommodates the innovation by fintechs without compromising market integrity and within limits that ensure investor protection.

The SEC noted that companies that want to apply and participate in the regulatory incubation programme  must  meet the five eligibility criteria which include the innovation for application in the Nigeria capital market; safe for investors; a genuine innovation that introduces a new product/process to serve specific investor needs; able to solve existing compliance or supervisory issues, and ready for testing.

The circular further revealed that fintechs in the areas of crowdfunding, robo advisory/digital investment advisory and sub-broker serving multiple brokers using a digital platform are not eligible for  application, stating that there are already regulations for them.