NIGERIA – Chaka, a fintech startup, has received a license from Nigeria’s Securities and Exchange Commission (SEC) to operate its digital platform for buying and selling stocks after months of uncertainty regarding regulations.
Chaka becomes the first to acquire the digital sub-broker license introduced by SEC in April of this year. As part of a major amendment to its Consolidated Rules and Regulations, SEC recognised sub-brokers who use digital platforms to serve multiple brokers.
On the 19th of December 2020, the SEC published a statement that effectively barred Chaka from offering its services in Nigeria. SEC’s complaint was that Chaka operated outside the regulatory purview of the Commission and without requisite registration, as stipulated by the Investment and Securities Act 2007.
“We’ve built a great relationship with SEC that we think will be beneficial for the whole ecosystem moving forward.”Tosin Osibodu – CEO, Chaka
SEC ordered Chaka to stop advertising to users, justifying it as a need to prevent unscrupulous actors from harming the investing public. Though the order was particular to Chaka, it was the first major signal that regulation was coming to the investment-tech sector.
That December warning enabled Chaka to take the lead and open talks with the SEC. With the license now acquired, Osibodu says it affirms Chaka’s commitment to full regulatory compliance and provides clarity to the market.
“We’ve built a great relationship [with SEC] that we think will be beneficial for the whole ecosystem moving forward,” Osibodu said.
He said the license also means Chaka could now enable other stockbroking firms who want to have a digital presence. “We want this benefit to accrue to as many stockbrokers as possible.”
Until now, Chaka’s operations were based on a partnership with Citi Investment Capital Ltd, a Lagos-based broker licensed by the SEC. An official license now places the startup directly under SEC’s supervision.
Founded in January 2019 by Osibodu with Olaolu Ajose as the chief technology officer, the startup bills itself as an investment passport which powers borderless investing for users. Chaka’s app hosts over 4,000 stocks from publicly traded companies in Nigeria and the US.