concluding arrangements to roll out its first regulatory framework for digital investment advisory services providers.
The framework brings digital or “Robo”advisors under the regulatory purview of Securities and Exchange Commission , Nigeria’s apex capital market regulator. In line with the above, a digital investment adviser shall disclose to his client in writing the assumptions, limitations and risks of the algorithms, circumstances under which the Robo Advisers may override the algorithms or temporarily halt the robo advisory service; and any material adjustments to the algorithms.
To safeguard the client-facing tools which are primarily algorithm-driven, a “Robo” or digital investment adviser shall put in place adequate governance and supervisory arrangements to effectively mitigate against fault or bias in the algorithms. The responsibilities of the directors of the digital investment advisory firms or platforms include approving the design and methodology development of the client-facing tool and ensuring its proper maintenance, approving the policies and procedures that apply to the systems and processes of the client-facing tool, maintaining oversight over the management of the client-facing tool, such as designating appropriate personnel to approve changes to the algorithms, having security arrangements to...
According to the proposed framework, the digital investment advisers shall implement internal policies and procedures to address technology risks while also meeting the requirements set out in SEC’s guidelines on technology risk management and also refer to the TRM guidelines for industry best practice which they are expected to adopt.