Fintech: Investor Safety Our main goal—SEC

The Securities and Exchange Commission has said that the safety of investors and their investments in the capital market is one of the main objectives of the rollout of the Regulatory Incubation Program for Fintechs.

This was stated by the Director of Registration, Exchanges, Market Infrastructure and Innovation at the SEC, Abdulkadir Abbas, during an interview in Abuja.

Abbas stated that the regulatory incubation program is a program designed as a temporary measure to actually facilitate genuine regulation of Fintech’s activities that will align with capital market issues.

He said that 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 and added that the incubation period will be open for one year.

According to Abbas, “It is only for testing, it will not be approved at that stage, but all Fintech ideas that comply with investment activities are defined in the Investment and Securities Act 2007, can be tested under that type of program. As we informed the market, there will be an initial assessment before it can be included in the regulatory incubation programme.

The SEC director said that the commission, through RI, offers a path where fintechs can test their ideas without affecting market integrity, adding that one of the other goals is to be able to create an opportunity to solve an existing problem in the market.

Abbas stated that the start-up has been very encouraging, with the SEC gaining traction with market participants showing more interest and has started the first phase, which is the first fintech review route.

He disclosed that prior to the inception of the RI, the SEC has been in contact with various fintech applicants, some of whom are existing capital market operators.

“Some are existing market players; some are actually new interests in the market, so we’ve had this kind of engagement. And from the time we announced the start until today, what has happened is that many applicants are actually getting access to what we call the initial assessment form, so there is a need that we can now provide the initial information, and that is the first phase of taking you into RI, that’s where we are now.

“And we’ve had a couple of engagements, and what really interests us is the uptake of new fintech companies that provide a solution to an existing problem in the market. But what we’re trying to do now very quickly is to encourage more of these fintechs to come now that we have opened this phase. We believe that it will really deepen the market and it will make it easier to bring new products into the market and new ideas will come to the fore to solve an existing problem in the market. As I said earlier, the main plan is to actually offer a path of new solutions without compromising investor protection, which is our main goal.”

Speaking about the legitimacy criteria, Abbass said: “Right, there are five legitimacy criteria. First of all, you have to have some kind of idea that will really bring a solution to an existing problem. That’s one of the legitimacy criteria. Second, as a fintech -company, you really need to be able to complete the initial assessment form and demonstrate to the Commission that the idea or proposal or solution is consistent with the investment activity that has been under the ISA, which is our own area of ​​responsibility.

“Third, you have to be able to test live using a new test scope of the market with live investors or live clients as it were, and then you have to be able to commit that you will comply with the rules and regulations if you are on board , and the final issue is that you should be ready to now commit that once the rules are in place after you come out of the regulatory incubation, you will now have to comply with the existing rule that will come out as a result of that test because we are also trying to learn, and as we learn, we may be able to come up with a rule that now fits that type of activity.

“So, in terms of response, we’ve just started, we’re already getting several applications; even this morning we received quite a few. So I can say that we have quite a few applicants who are really interested in this test using the regulatory incubation that the SEC has come up with.”