Welcome
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.
SEC Innovation Objective
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 Regulatory Incubation Guidelines
Download Guidelines Here
The Regulatory Incubation (RI) program is designed to address the needs of new business models and processes that require regulatory authorization to continue carrying out full or ancillary technology-driven Capital Market activities. The RI Program has thus 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 RI Program will be launched in the third quarter of 2021 and will operate by admitting identified Fintech business models and processes in cohorts for a one-year period. Participation in the RI program will encompass an Initial Assessment Phase and the Regulatory Incubation Phase. The categories to be admitted into each cohort will be determined based on submissions received through the FinTech Assessment Form and communicated ahead of each take-off date.
Review of completed Fintech Assessment Forms will continue on an ongoing basis. FinTechs who consider that there is no specific regulation governing their business models or who require clarity on the appropriate regulatory regime for seeking the authorization of the Commission, are encouraged to complete the Fintech Assessment Form.
Steps for Admission into the Regulatory Incubation Program
Participation in the Regulatory Incubation Program will encompass an Initial Assessment Phase and the Regulatory Incubation Phase.
A. Initial Assessment | ||
| Activity | Applicable Timeline | |
| Step 1 | Fill the FinTech Initial Assessment (FIA) Form | N/A |
| Step 2 | Receipt of Response/Acknowledgment of Submission: | Within 15 working days |
1. Where a framework exists for regulating the applicant’s innovation, guidance will be provided on the next steps | ||
2. Where the proposed innovation is eligible for further consideration, but no framework exists for its regulation, the applicant will be directed to fill and submit the Regulatory Incubation (RI) Form | ||
| Step 3 | Comply with steps provided in Step 2 above or fill and submit Regulatory Incubation Form as applicable | Within 16 working days of confirmation of eligibility for entities proceeding to the RI Program |
| Step 4 | Receipt of Response on submitted RI Form on one of the following: a) Whether or not admission has been granted to the RI Program and the Terms and Conditions of Admission; b) An indication of a future date when Applicant will be admitted to the Regulatory Incubation Program; c) Reasons for rejecting the innovation and the next steps to take where application is declined. | within twenty (20) working days |
B. Regulatory Incubation Program | ||
| Step 1 | File undertaking to abide by the terms, conditions and restrictions of admittance into the RI Program | Within three working days of receipt of Letter of Admission into the program |
| Step 2 | Commencement of Regulatory Incubation Program | as detailed in Admission Letter |
| Step 3 | Receipt of feedback from the RI Team | At the end of every quarter following commencement of the RI Program |
| Step 4 | Receipt of guidance on applicable regulatory regime and regulatory requirements | By 10th Month of admission |
| Step 5 | Exit from the program with clear directives on next steps to take | 12th Month of Admission except where an extension is granted. |
| Step 6 | Commence Operation as a registered entity or termination of activity where registration is not completed as directed | |
SEC Classification of Virtual Digital Assets and their Treatment
The Commission has adopted the following with respect to virtual crypto assets:
“Crypto Asset” means a digital representation of value that can be digitally traded and functions as (1) a medium of exchange; and/or (2) a unit of account; and/or (3) a store of value, but does not have legal tender status in any jurisdiction. A Crypto Asset is –
a. neither issued nor guaranteed by any jurisdiction, and fulfils the above functions only by agreement within the community of users of the Crypto Asset; and
b. Distinguished from Fiat Currency and E-money.”
The SEC hereby categorizes the following virtual assets/instruments as follows:
| S/N | VIRTUAL DIGITAL ASSET | TREATMENT |
| 1. | 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. |
NCM FinTech Roadmap Report
Report of the FinTech Roadmap Committee of the Nigerian Capital Market
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.
FAQ's
Frequently Asked Questions: Innovation Focus
- What is regulatory innovation?
- It is the regulatory response to advancement in financial innovation.
- Is the plan by Regulators to regulate innovation an attempt to stifle innovation and
entrepreneurship?
- No. Rather it’s a concerted effort to support innovation and make it safe for
investors, operators and the Capital Market in general.
- What internal structure has the Securities & Exchange Commission introduced so far,
to support innovation?
- The SEC has created a Fintech and Innovation Office (FINO) to facilitate internal &
external information dissemination, communication with innovators and
provide guidance on regulatory requirements.
- What other roles does the Fintech and Innovation Office (FINO) play?
- It reviews submissions from FinTech firms and coordinates collaboration between
operational departments of the SEC which supervise and monitor products
and processes in the Capital Market.
- How can one access the FinTech and Innovation Office?
- Via e-mail: innovation@sec.gov.ng.
- Via Telephone: +234(0)946211159 (Ext. 1277, 1432), +234(0)946211277
- Via the FinPort contact form
- visit the FINO (FinTech & Innovation Office) at SEC Head Office in Abuja
- Does the SEC have an engagement plan with the FinTech community?
- Yes the SEC has an engagement timetable with various discovered FinTech Firms. This engagement timetable will be expanded as more firms are discovered.
- What other external mechanisms has the SEC deployed to understand the FinTech eco-system?
- The SEC has inaugurated the FinTech Roadmap Committee in November 2018, comprising FinTech entrepreneurs, technology experts, Capital Market trade groups, financial sector regulators, banks, legal Firms, innovation hubs and FinTech organizations.
- What is the mandate of the FinTech Roadmap committee?
- To produce a snapshot of the current status of FinTech developments in the Nigerian Capital Market and propose a holistic plan for facilitating & developing FinTech as a tool for deepening the Market.
- What is the status of progress made by the Fintech Roadmap Committee?
- The Committee has produced a Report, which is accessible for comments on the SEC website.
- How many FinTech and innovation Firms has the SEC engaged so far?
- The SEC has engaged over Hundred (100) Firms via its FinTech assessment form on the SEC website and through formal meetings.
- Has the SEC engaged with any innovation hub in the country?
- Yes the SEC has engaged with innovation hubs in Abuja and Lagos and is in constant communication with them.
12. Have any FinTech Firms come forward to apply for regulation?
- Yes a number of FinTech Firms have applied for permission to operate.
13. Will FinTech Firms already operating be closed down immediately they come forward to engage the SEC?
- The SEC will not close down any firm immediately it comes forward. Rather the firm will be assessed on its risk exposures and guided towards coming under SEC regulation. However, if its operations are too risky for investors, it will have to accept and operationalize SEC guidance on investor protection and market stability.
14. How long will it take to receive SEC approval to offer a FinTech product or process?
- The length of time depends on the nature of product and whether or not the SEC has existing Rules or Guidelines to regulate them.
Contact Us
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Via e-mail- fintech@sec.gov.ng
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Via Telephone –+234(0)946211159 (Ext. 1277, 1432), +234(0)946211277
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visit the FINO Office at SEC Tower, Abuja
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Via this Form:
