Nigeria’s Securities and Exchange Commission (SEC) has released a set of proposed rules on online forex (FX) trading and contract for difference (CFD).
Specifically, the SEC said an Online Forex Broker Dealer operating the Market Maker/Principal Operator model shall maintain a Minimum Paid-up Capital of N3 billion, unimpaired by losses.
The SEC proposes that the entity must maintain a Minimum Liquid Capital of either N2.4 billion (80 percent of the capital) or 10 percent of total liabilities (whichever is higher) at all times.
SEC also proposed that an Online Forex Broker operating the Straight-Through Processing (STP) Operator model or the Electronic Communication Network (ECN) model shall maintain a Minimum Paid-up Capital of N2billion, unimpaired by losses.
“The entity must maintain a Minimum Liquid Capital of either N1.6 billion (80 percent of the capital) or 10percent of total liabilities (whichever is higher) at all times,” SEC proposes.
SEC said the Rules shall apply throughout Nigeria and to all persons engaging in or offering online forex trading services to residents of Nigeria, “whether using a platform or medium incorporated domestically or operate from outside Nigeria while targeting Nigerian residents”.
The proposed Rules apply to the following categories of persons (collectively, “Regulated Entities”): Introducing Brokers; Online Forex Brokers/Broker Dealers; Technology and Platform Providers; and Offshore entities that: lists Nigeria as an accessible or supported country on its website, mobile application, trading platform or client onboarding portal; permits persons resident in Nigeria to open or maintain trading accounts; and advertises, markets or promotes its services to residents of Nigeria, including through Nigerian influencers, affiliates, introducing brokers, training providers, seminars, webinars, social media pages or online campaigns.
According to the SEC, the Rules apply to offshore entities that use Nigerian currency, Nigerian market references, Nigerian contact details or Nigeria specific promotional materials in connection with its services; maintains representatives, agents, affiliates, introducing brokers, training providers or customer-support channels in Nigeria; or have clients who are resident in Nigeria or otherwise conducts business in a manner that indicates an intention to provide online forex CFD trading services to residents of Nigeria; and any person who carries on or purports to carry on any regulated activity under these Rules.
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