The Securities and Exchange Commission of Nigeria has issued a circular directing Investment Technology platforms such as Bamboo, Chaka and Trove to cease and desist from offering foreign stocks to Nigerians.
READ: SEC declares Bamboo, Risevest, others unregistered trading platforms
What does this mean?
SEC Nigeria is exercising its legal powers and reminding participants and investors alike that only approved securities can be sold to the Nigerian public.
In other words, foreign stocks such as Tesla Inc, Apple, Amazon, Google etc. which are currently not listed within Nigerian jurisdiction should NOT be offered to Nigeria-based residents and businesses.
Consequently, this new SEC directive now creates additional obstacles for young Nigerians who have been leveraging these new invest tech service providers to help diversify their portfolios.
Unfortunately, this SEC Nigeria directive is coming on the heels of the CBN directive prohibiting Banks from facilitating Nigerians trading Cryptocurrencies.
READ: How to Invest in International Stocks (1)
What happens next?
The immediate next steps are yet to be officially announced.
However, the SEC Nigeria has become more vocal of recent about the proliferation of alternative investments opportunities being offered to Nigerians. Additional concerns about capital flight from Naira to foreign destinations also contribute to the increasing protectionist stance from financial regulators in Nigeria.
For the service providers, this directive adversely impacts their business model and intense lobbying will be required to ensure the regulator’s concerns are adequately addressed.
Ultimately it is probable that this directive is a precursor to the SEC creating a more robust oversight framework. So watch this space.