The Securities and Exchange Commission (SEC) of Nigeria has reaffirmed its unwavering commitment to the safety of investors and their investments within the capital market, emphasizing it as a cardinal objective.
In pursuit of this goal, the regulatory body has introduced the Regulatory Incubation Programme for Fintechs, aimed at ensuring genuine regulation of financial technology activities while upholding the standards of the capital market.
During an interview in Abuja, Mr. Abdulkadir Abbas, Director of Registration, Exchanges, Market Infrastructure, and Innovation at SEC, shed light on the key objectives and structure of the regulatory incubation program.
He likened the program to a sandbox, designed to facilitate the testing and validation of innovative fintech ideas in accordance with SEC guidelines. The incubation period will span one year, offering participants ample time to refine their concepts.
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Abbas elaborated, stating, “The program is solely for testing purposes and does not imply immediate approval. However, all fintech ideas that align with investment activities defined in the Investment and Securities Act 2007 can undergo testing under this program.”
He further explained that an initial assessment would be conducted to evaluate the fintech ideas before granting access to the regulatory incubation program.
The SEC’s initiative aims to create an environment where fintechs can test their ideas without compromising the integrity of the market, while also seeking to address existing market issues.
Abbas expressed satisfaction with the initial response from market participants, highlighting the positive momentum gained since the program’s launch. The first stage, involving fintech assessments, has already commenced.
“We have been engaging with various fintech applicants, including existing capital market operators and newcomers to the market,” Abbas shared.
“Since announcing the program’s launch, we have witnessed a surge in the number of applicants accessing the initial assessment form. This marks the first step towards onboarding into the regulatory incubation program.”
Abbas expressed enthusiasm about the increasing interest from new fintech companies that offer solutions to existing market challenges.
The SEC is keen to encourage more fintechs to participate, as it believes this will enhance market depth and introduce new products that address prevailing issues.
He reiterated the SEC’s unwavering commitment to investor protection as a key objective throughout the program.
When discussing the legitimacy criteria, Abbas outlined five essential factors. First and foremost, fintech companies must propose ideas that provide solutions to existing market problems.
Secondly, they must complete the initial assessment form, showcasing their compliance with the Investment and Securities Act.
Thirdly, companies must be ready to conduct live tests, involving real investors or customers, within a new market scope.
Additionally, they should commit to abiding by the rules and regulations upon entering the program, and ultimately, they must be prepared to comply with the established rules after the regulatory incubation period.
While still in its early stages, the regulatory incubation program has already garnered significant interest, with numerous applications being received.
“We are already receiving a growing number of applications, including several this morning. It is safe to say that we have a considerable number of applicants genuinely interested in testing their fintech innovations through the SEC’s regulatory incubation program,” Abbas confirmed.