Chaka turns into the first startup to receive SEC license for digital stock buying and selling in Nigeria

After months of uncertainty concerning guidelines, Chaka has obtained a license from Nigeria’s Securities and Change Commission (SEC) to feature its digital platform for getting for and selling stocks. 

Chaka turns into the first to form the digital sub-dealer license launched by SEC in April of this one year. As fragment of a vital modification to its Consolidated Rules and Regulations, SEC recognised sub-brokers who use digital platforms to reduction more than one brokers. 

Tosin Osibodu, the startup’s CEO, said on a call on Wednesday that the acquisition took “a gigantic quantity of effort” and is the fruit of frequent engagement with the capital markets regulator.

On the 19th of December 2020, the SEC published a explain that effectively barred Chaka from offering its products and companies in Nigeria. SEC’s grievance became once that Chaka operated “birth air the regulatory purview of the Commission and with out requisite registration, as stipulated by the Funding and Securities Act 2007.”

SEC ordered Chaka to discontinuance selling to users, justifying it as a must prevent “unscrupulous actors” from harming the investing public. Despite the truth that the yell became once particular to Chaka, it became once the first vital stamp that law became once coming to the funding-tech sector.

That December warning enabled Chaka to raise the lead and begin talks with the SEC. With the license now obtained, Osibodu says it affirms Chaka’s commitment to elephantine regulatory compliance and presents readability to the market.

“We’ve built a gigantic relationship [with SEC] that we deem will likely be priceless for the whole ecosystem transferring ahead,” Osibodu said.

He said the license furthermore manner Chaka would possibly perchance well now allow varied stockbroking firms who must bear a digital presence. “We need this attend to accrue to as many stockbrokers as conceivable.”

Till now, Chaka’s operations were per a partnership with Citi Funding Capital Ltd, a Lagos-essentially based completely completely dealer licensed by the SEC. An reliable license now areas the startup straight under SEC’s supervision.

Chaka’s app hosts over 4,000 stocks from publicly traded firms in Nigeria and the US. Based in January 2019 by Osibodu with Olaolu Ajose as the chief technology officer, the startup payments itself as an “funding passport” which powers borderless investing for users.  

Someone with an knowledge superhighway-enabled smartphone can salvage the app, stamp in and begin investing with $2 or ₦1,000. Chaka is glorious on hand in Nigeria at the second.

Osibodu did no longer specify what Chaka did, by methodology of prices or filings, to receive the license. 

However in accordance to the SEC’s fresh modification (pdf, web page 3), a sub-dealer license for digital platforms entails a minimal capital of ₦10 million and a Constancy Bond conserving no longer no longer as a lot as 20% of the minimal capital. 

Other requirements encompass four separate prices totalling ₦500,000, a alternative of SEC forms, company documents and varied documentation about of us concerned with the company.

Digital sub-brokers are furthermore required to utterly notify the technology that their infrastructure is built on, together with small print about safety, backup and recovery processes.

They must bear enough Know Your Customer processes and bear documented policies for managing technology dangers. Also, they’re anticipated to show conceal how they assess the capacity of skill clients to use its platform for transactions, plus particular explanations of the capabilities, dangers, tasks, tasks and liabilities that advance with the usage of the app.

It’s no longer particular if this license officially permits Chaka (and varied fintechs in the sphere) to present stocks listed in foreign markets – esteem Tesla and Google – to Nigerians. In April, SEC sounded a warning that regarded to describe such offerings as being unlawful.

Osibodu’s coy response became once that Chaka is devoted to SEC’s targets for monetary inclusion in Nigeria by, among varied issues, rising retail investor participation in the monetary markets.

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