SEC Starts Regulatory Incubation Programme for Fintechs

By Aduragbemi Omiyale

Financial technology (fintech) companies operating or seeking to operate in the Nigerian capital market have been asked to register for the Regulatory Incubation (RI) programme of the Securities and Exchange Commission (SEC).

A circular from the apex regulatory in the ecosystem disclosed that the portal for the regulatory incubation programme would be opened to fintech from April 28, 2023, to May 26, 2023.

SEC explained that the decision to open a portal came from a 2021 notice from the commission on the imminent roll-out of the SEC regulatory incubation scheme for fintechs.

The agency noted that companies that want to apply and participate in the programme must meet the five eligibility criteria.

The requirements are applicants must provide safety for investors, a genuine innovation that introduces a new product/process to serve specific investor needs; be able to solve existing compliance or supervisory issues (optional) and be ready for testing.

“Please provide as much information as possible about how you meet these criteria when submitting your application. If you are looking to test your proposition, you may apply for an engagement session,” it stated.

The circular further revealed that fintechs in the areas of Crowdfunding, Robo Advisory/Digital Investment Advisory and Sub-Broker Serving Multiple brokers using a digital platform are urged not to apply, adding that there are already regulations for them and they should not apply for regulatory incubation.

“The Regulatory Incubation (RI) program is designed to address the needs of new business models and processes that require regulatory authorisation 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,” SEC added.

It stressed that those that can apply are “registered capital market operators, unregistered fintech innovators that require regulation, firms of all sizes and firms that want to enhance investor participation in the Nigeria capital market,” adding that, “Cohorts will be announced at specific times.”