In a circular released by Nigeria’s capital market regulator SEC, investment platforms providing access to foreign securities might be treading on dangerous grounds. According to the SEC new regulations, these platforms are trading foreign securities not registered in the country and have been warned to stop doing so. Capital market operators in partnership with them have also been warned to renege on providing such services.
Over the past three years, Robinhood-esque platforms like Bamboo, Trove, Chaka and Rise have sprung forth in the Nigerian fintech space. They offer Nigerians access to stocks, bonds and other securities in both local and international markets. These platforms have grown in popularity among the middle class and provide a haven to protect earnings from naira devaluations.
That said, there’s a vast difference in how they operate when compared to Robinhood. In addition to being a trading app, Robinhood offers online brokerages (introducing and clearing) and also zero commission trading. Nigerian investment platforms do not, and while any trading platform can get a brokerage license in the U.S., it can be a Herculean task to obtain one in Nigeria. This is where capital market operators (local and foreign brokerage firms in this case) come into play, …read more
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