May 14, 2023/SEC Nigeria
The Securities and Exchange Commission has said that the safety of investors and their investments in the capital market is one of its cardinal objectives in rolling out its Regulatory Incubation Programme for Fintechs.
This was stated by Director, Registration, Exchanges, Market Infrastructure and Innovation, Mr. Abdulkadir Abbas during an interview in Abuja.
Abbas stated that the regulatory incubation program is a program that is designed as an interim measure to actually facilitate genuine regulation of Fintechs activities that will conform to the capital market issues.
He said the idea of coming up with this program which is like a sandbox, is to be able to come and test innovative ideas as stated in the SEC guidelines adding that the incubation period would be open for one year.
According to Abbas, “It is just for testing, it will not be approved at that stage but all Fintech ideas that conforms with investment activities are defined in Investment and Securities Act 2007 can be tested under that kind of program. As we informed the market, there is going to be an initial assessment before it can be on-boarded into the regulatory incubation program.
The SEC Director said the Commission through the RI, is providing an avenue where fintechs can test their ideas without affecting the market integrity adding that one of the other objective is to be able to create an opportunity to solve an existing problem in the market.
Abbas stated that the takeoff has been very encouraging with the SEC gaining traction with market participants showing more interest and have commenced the first stage which is the initial fintech assessment route.
He disclosed that before the take-off of the RI, the SEC has been having engagement with various fintech applicants some of whom are existing capital market operators.
“Some are existing market operators; some are actually new interests into the market so we have been having this kind of engagement. And from the time when we announced the takeoff till today, what has been happening is that a lot of applicants are actually accessing what we call the initial assessment form so there is a need which we can now be able to provide the initial information and that is the first stage of on boarding you into the RI, that is where we are now.
“And we have had couple of engagements and what interest us really is the traction of new fintech companies providing a solution to an existing problem in the market. But what we are trying to do now very quickly is to encourage more of this fintechs to come now that we have opened this phase. We believe that it will really deepen the market and it will facilitate bringing new products into the market and new ideas will come on board towards solution of existing problem in the market. As I said earlier, the principal plan is to actually provide an avenue of new solutions without compromising on investor protection which is our own key objective”.
Speaking on the legitimacy criteria, Abbass said, “Right, there are five legitimacy criteria. First of all, you must have a kind of idea that will really bring a solution to an existing problem. That is one of the legitimacy criteria. Second, as a fintech company you must be able to really fill the initial assessment form and demonstrate to the commission that your idea or proposal or solution, has conformed to the investment activity that has been under the scope of the ISA which is our own purview.
“Thirdly, you must be able to be ready, to test live using a new test scope of the market with live investors or live customers as it were and then you must be able to commit that you will abide by the rules and regulations if you’re on boarding and the last issue is that you should be ready to now commit that once the rules are put in place after you come out of the regulatory incubation you must now comply with the existing rule that will come out as a result of that testing because we too we are trying to learn and by the time that we learn, we can be able to come up with a rule that would now fit that kind of activity.
“So in terms of response , we just started we are already getting more applications, even this morning we received quite a number. So I can say we have quite a number of applicants that are really interested in this testing using the regulatory incubation that the SEC has come up with”.
