April 22, 2021
On 8th April, 2021, the Securities and Exchange Commission (“SEC” or the “Commission”) issued a Notice informing the investing public of the existence and rapid expansion of unauthorized investment and trading platforms which facilitate direct access to securities of foreign companies and the need to seek clarifications on investment products advertised through online or conventional means.
The apex regulatory agency for the Nigerian Capital Market is the Securities and Exchange Commission. The Commission is empowered by Section 13 of the Investment and Securities Act (ISA), 2007 to issue directives and to take steps to protect the investing public.
The Notice issued by SEC states that the attention of the Commission had been drawn to the existence of several providers of online investment and trading platforms which purportedly facilitate direct access of the investing public in Nigeria to securities of foreign companies listed on Securities Exchanges registered in other jurisdictions.
Sections 67-70 of the ISA, 2007 and Rules 414 & 415 of the SEC Rules and Regulations state that 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 Notice also states that these platforms claim to be operating in partnership with Capital Market Operators (‘‘CMOs’’) registered with the Commission. The Commission, in the Notice, warned registered CMOs who work in concert with the referenced online platforms to disengage themselves from unauthorized trading activities and collaborations with unauthorized trading platforms.
The Commission also urged the investing public to solicit clarity on what is needed through its established communication channels on investment products advertised through conventional or online media platforms.
Although, the powers of the Commission in issuing Directives of this nature to protect the investing public is not in doubt, the inability of the Commission to issue a clear cut Regulations for online trading platforms is a cause of concern. There is the need for the Commission to issue regulations to govern the activities of investment technology platforms which will bring them under the purview of the Commission thus giving a wide array of the foreign securities available to the investing public.