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The SEC is proposing rules for the operation of Robo-Advisors in Nigeria
The Securities and Exchange Commission, SEC is taking steps to upgrade the investments and financial services in Nigeria with rules and regulations.
In early recognition of Robo advisors in Nigeria, the SEC released an exposé on its Proposed New rule on Robo-Advisory Services in May for feedback from the public.
Robo-Advisor service providers have been slow to take off in Nigeria like in the rest of the world.
At this time, making financial plans in Nigeria is handled by investment tech solutions. They offer their services to clients through capital management platforms.
They package savings, investment plans as well as advising investors on stock market engagement and gains.
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The SEC rules on Robo Advisors in Nigeria
The proposed rules by the SEC on Robo-Advisory services takes into consideration several fund management and investment topics.
- Regulatory compliance would require a Robo-advisor to comply with all Investment and Securities Act (“ISA”) and the Rules and Regulations, Notices and Guidelines issued therein.
- Compliance with the 2013 provision for registration requirements of Corporate and Individual Investment Advisers.
- A Robo-Advisors must consult the SEC registration as a fund manager if it has portfolio management services plans for clients.
- The principal officers of a Robo-advisor must have experience with fund management and technology.
- The rules would also require Robo-advisors to carry out clients assessments and apply the Customer Knowledge Assessment (“CKA”).
- SEC rules also allow for Robo-Advisors to offer foreign securities trade advice to investors in Nigeria as long as they provide a risk warning statement as well.
- Also included is a rule for the disclosure of clear material information about the investment options available to an investor.
