Chaka has become the first Fintech company to receive the SEC’s Digital Sub-Broker and Sub-Broker Serving Multiple Brokers through a digital platform license.
This will enable the fintech company to continue powering digital investments for Nigerian companies, retail investors, and institutional investors.
However, It is not clear if this license officially permits Chaka (and other fintechs in the sector) to offer stocks listed in foreign markets to Nigerians. Earlier this year, SEC issued a warning that seemed to declare such offerings as being illegal.
6 months ago, Regulatory body SEC released a circular restricting fintech app and Investment platform Chaka Technologies inc and its promoters from advertising or offering for sale shares, stock or other securities of companies or other entities.
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.” Though the 19th of December, 2020 order was particular to Chaka, it was the first major signal that regulation was coming to the investment-tech sector.
This development had led Chaka to take steps in registering for the “newly created license” with the Securities Exchange Commission of Nigeria (SEC) as disclosed in a statement
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 2019 by Tosin Osibodu and Olaolu Ajose, Chaka enables every business and person in Africa to access borderless digital investment and wealth management opportunities. The platform offers over 4,000 stocks from publicly traded companies in Nigeria and the US.
There are no specifications as to what Chaka did, in terms of fees or filings, to receive the license. But according to the SEC’s recent amendment (pdf, page 3), a sub-broker license for digital platforms involves a minimum capital of ₦10 million and a Fidelity Bond covering at least 20% of the minimum capital.
Other requirements include four separate fees totalling ₦500,000, a number of SEC forms, company documents and other documentation about people involved the company.
Commenting on the license acquisition, Tosin said,“We are honoured to be the foremost fintech company to receive SEC’s first Fintech license in Nigeria, the Digital Sub-Broker license.
For us, this is an important step towards achieving our vision to level the playing field for African investors, and a defining moment for the future of digital investments in Nigeria, and Africa at large.
Receiving this new license will enable us to continue to power on our mission to enable digital investing for businesses and individuals in the country and beyond.
As Nigeria remains an attractive hive for fintech innovation, this new license from the SEC is the much-needed guide to help safeguard the investing public amid the ever-evolving landscape.
This license represents a significant milestone for all players within this industry, and we are confident that it will strengthen efforts towards fostering further growth and transformation.
We are proud to set this precedent and are excited for the long-term impact of this new regulation and what it signals for the future. We are also thankful for the continued trust from our investors and partners, as we remain committed to fulfilling their needs.”
Chaka is only available in Nigeria at the moment, anyone with an internet-enabled smartphone can download the app and start trading with as low as $2 or ₦1,000.