The Securities and Exchange Commission (SEC) has initiated the Regulatory Incubation (RI) programme, which is aimed at assisting Fintech firms that are currently operating or planning to operate in the capital market of the country. According to a circular released by the Commission in Abuja, the RI portal will be available to registered capital market operators and unregistered Fintech innovators who require regulation from April 28 to May 26. The circular stated that Cohort 001/23 can now submit their applications through the portal, and cohorts will be announced at specific times.
The circular identified the applicants that can apply, including registered Capital Market Operators, unregistered Fintech innovators that require regulation, firms of all sizes, and firms that want to enhance investor participation in the country’s capital market. To participate in the RI Programme, companies must meet five eligibility criteria outlined by the SEC. These criteria include ensuring that the product or process is safe for investors, presenting genuine innovation that offers a new product or process to meet specific investor needs, and the ability to solve existing compliance or supervisory issues.
The SEC advised applicants to provide as much information as possible when submitting their applications about how they meet the eligibility criteria. The circular also stated that if an applicant wishes to test their proposition, they may apply for an engagement session. The SEC further stated that Fintechs operating in crowdfunding, robo-advisory/digital investment advisory, and sub-broker serving multiple brokers using a digital platform would not be eligible to apply as they are already regulated.
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The RI programme 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 Regulatory Incubation (RI) programme by the Securities and Exchange Commission (SEC) will assist startups in the following ways:
- Regulatory Support: The RI programme provides regulatory support to startups that require regulation to operate in the capital market. This programme will assist startups to meet regulatory requirements and obtain the necessary authorisation to continue carrying out technology-driven capital market activities.
- Innovation: The RI programme promotes genuine innovation that introduces new products or processes to meet specific investor needs. This will encourage startups to come up with innovative solutions that solve real problems and provide value to investors.
- Compliance: The RI programme assists startups in complying with existing compliance or supervisory issues. This will enable startups to operate within the regulatory framework and ensure that they comply with the rules and regulations governing the capital market.
- Investor Confidence: The RI programme ensures that startups that participate in the programme meet the eligibility criteria, including safety for investors. This will help to enhance investor confidence in startups and encourage more investors to participate in the capital market.
- Engagement Sessions: The RI programme allows startups to apply for engagement sessions, which will enable them to test their propositions. This will provide startups with the opportunity to receive feedback and improve their products or processes before launching them to the market, which can increase the chances of success.
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Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard