Chaka Receives SEC license for digital stock trading, first in Nigeria
After a tortuous regulatory hurdle spanning many months, Chaka has become the first fintech startup to receive the Digital Sub-Broker/Sub-Broker Serving Multiple Brokers through a digital platform license from the Nigerian Securities and Exchange Commission.
This new license issued by the Commission empowers Chaka to continue its digital investment operations for Nigerian companies, retail investors, and institutional investors.
Around December 2020, the SEC released a notice barring Chaka from offering its services in Nigeria because it operated “outside the regulatory purview of the commission and without requisite registration as stipulated in the Investment and Securities Act 2007”.
Due to this notice, Chaka suspended operations and released a statement in March saying they were in talks with the SEC to register for a “newly created license” that will enable the company to conduct its business without hiccups.
This spat with Chaka was a hint to other fintech companies that the SEC was serious about regulating the Nigerian fintech space. Months later, the SEC would publish a statement on the proliferation of “unregistered” online and trading platforms involved in facilitating purported direct access to trading in securities of foreign markets.
This statement led other investment fintech companies to approach the SEC and start the process of acquiring a new license that will allow them to operate too.
Today, Chaka has become the first fintech to receive the license and be confirmed as a Digital Sub-Broker/Sub-Broker Serving Multiple Brokers through a digital platform.
Prior to this time, Chaka’s investment operations were done in partnership with Citi Investment Capital LTD, a Lagos-based broker licensed by the SEC. With this license, Chaka has now been confirmed as a company directly under the supervision of the SEC.
’This license cements Chaka’s status as a frontline Fintech company powering investing for Nigerian companies, retail investors, and institutional investors. As such, Chaka’s operations remain within SEC’s purview as we accelerate our mission to enable individuals and businesses to invest in capital markets
We are committed to ensuring that our investors have the requisite safeguarding and security as any regulated financial institution, and receiving SEC’s first Fintech license demonstrates our sustained commitment to regulatory compliance.
This license is an important step towards achieving our vision to level the playing field for African investors. And just as importantly, a defining moment for the future of digital investments in Nigeria, and Africa at large,” Chaka wrote in a statement.
While this license is a welcome development in the Nigerian fintech space, it is still unclear if this new license legalizes the offering of foreign stocks to Nigerians by various fintech companies. As a recent warning by the SEC seems to suggest otherwise.