Welcome to FinPort, the SEC’s Portal where innovations and Financial Technology (FinTech) are encouraged and facilitated. The SEC believes that the driver to transforming Nigeria into a smart financial centre is the provision of a regulatory environment that is conducive for innovative use of technology. FinPort has been established to assist all new and even existing Financial Technology (FinTech) businesses to understand the regulatory demands or requirements relevant to the Nigerian capital market.
The Securities and Exchange Commission Nigeria as the apex regulator of the Nigerian Capital Market, is empowered by the Investment and Securities Act 2007 to regulate and develop the Nigerian Capital to ensure fairness, integrity, ease and freedom of participation (entry & exit). In that light, the SEC is always fully alert in tracking new developments in the financial markets in general and the Capital Market in particular. The evident preponderance in the Nigerian Financial Markets as in other global markets, of new innovations aimed at enhancing financial products and services through the application and utilization of technology tools among others, necessitates the creation and adoption of adequate processes and tools to satisfactorily deliver on the Commission’s mandate.
The financial innovation landscape as agreed by all, is an evolving one. The Commission like regulators all over the world, is prepared to evolve with it. It has put mechanisms in place to understand these new innovations, build required capacity and subsequently deploy strategies to address them. This process is an ongoing one and the Commission is deeply committed to this new phase and face of our Capital Market.
In the Commission’s resolve to facilitate innovation in the Nigerian Capital Market, it has articulated and adopted a three-pronged objective to regulate innovation. While it is both accommodating and futuristic, it also ensures adherence to our regulatory mandate and aims to provide confidence to all stakeholders. This objective hinged on safety, market deepening and solution to problems as outlined below, will guide our strategy, our regulations and our interaction with innovators seeking legitimacy and relevance, thereby creating value in the Nigerian Capital Market.
Three-pronged Objective to Regulate Innovation in the Nigerian Capital Market
Indeed SEC Nigeria is committed to a journey whose destination though uncertain will undoubtedly experience different turns, several weather conditions and diverse vehicles. All stakeholders are urged to come on board and commit to developing a Capital Market that will contribute in a more resounding way, to the economic development of our Nigeria.
SEC Classification of Virtual Assets/Instruments:
|S/N||VIRTUAL DIGITAL ASSET||TREATMENT|
Crypto Asset- e.g non fiat virtual currency.
|Treated as commodities if traded on a Recognized Investment Exchange and/or issued as an investment, and is subject to Part E of SEC Rules and Regulations and any other relevant sections and subsequent Rules which will be enacted in future|
|2.||Utility Tokens or “Non-Security Tokens” (e.g., virtual tokens. These tokens simply provide users with a product and/or service.||Treated as commodities. However, spot trading and transactions in Utility Tokens do not fall under SEC purview unless conducted on a Recognized Investment Exchange and therefore subject to Part E of SEC Rules and Regulations and any other relevant sections and subsequent Rules which will be enacted in future|
|3.||Security Tokens” (e.g., virtual tokens that have the features and characteristics of a security. Represent assets such as participations in real physical underlyings, companies, or earnings streams, or an entitlement to dividends or interest payments. In terms of their economic function, the tokens are analogous to equities, bonds, etc.||Deemed to be Securities pursuant to PART XVIII (315) of ISA, “definition of Securities’’. All financial services activities in relation to Security Tokens, such as operating primary / secondary markets, dealing / trading / managing investments in or advising on Security Tokens, will be subject to the relevant regulatory requirements. Market intermediaries and market operators dealing or managing investments in Security Tokens need to be registered / approved by SEC as CMOs, Recognized Investment Exchanges or Recognized Clearing Houses, as applicable.|
|4.||Derivatives and Collective Investment Funds of Crypto Assets, Security Tokens and Utility Tokens||Regulated as Specified Investments under the ISA & SEC Rules and Regulations. Market intermediaries and market operators dealing in such Derivatives and Collective Investment Funds will need to be registered / approved by SEC.|
At the 2nd Capital Market Committee Meeting of the year, which took place on Thursday, August 22, 2019, the Report of the FinTech Roadmap Committee of the Nigerian Capital Market was presented to and accepted by the Capital Market community. The Report highlights the current application of FinTech in the market, opportunities, challenges and recommendations.
Stakeholders are hereby invited to comment and provide feedback on the Report. Please send your comments via firstname.lastname@example.org on or before COB Friday, September 20, 2019.
Frequently Asked Questions: Innovation Focus