After years of legislative scrutiny and stakeholders’ engagements among others, President Bola Tinubu last Saturday gave assent to the Investment and Securities Act (ISA) 2024, effectively bringing the law into force, thus repealing the ISA 2007.
The replacement of ISA 2007 with the ISA 2024 has taken several years primarily on account of legislative, political, and economic factors. Notwithstanding the long delay, experts are of the view that Nigeria can now boast of a modernized and globally aligned regulatory framework, which has addressed key issues such as digital assets, investor protection, and financial market infrastructure, all geared towards boosting investor confidence and strengthening the capital market in Nigeria.
The new legislation, which repeals the former Investments and Securities Act No. 29 of 2007, is aimed at strengthening the legal and regulatory framework for investments and capital market activities in the country.
The presidential assent is a transformative step toward enhancing investor protection, improving market transparency, and fostering sustainable growth.
The enactment of the ISA 2025, according to the Securities and Exchange Commission, reaffirms its authority as the apex regulator of Nigeria’s capital markets and introduces significant reforms designed to align local operations with international best practices.
The Act also introduces structural reforms and innovations across various dimensions of Nigeria’s capital market, with implications for exchanges, digital asset operators, commodities trading, and systemic risk management.
THE WHISTLER analysed the Act, and here are ten major reforms introduced by the newly signed ISA 2025 that would boost the performance of the Nigerian Capital Market:
Legal framework For Commodity Exchanges, Warehouse Receipts.
To support commodity-based economic activities, the Act introduces a legal framework for commodity exchanges and warehouse receipts.
This is expected to stimulate growth in agriculture, mining, and other commodity-dependent industries by enabling more structured financing and reducing risks for market participants.
The ISA 2025 also grants greater flexibility to sub-national governments and their agencies to raise funds from the capital market.
This reform could open new financing windows for infrastructure development, especially for states seeking alternative means to fund projects without over-relying on federal allocations or commercial borrowing.
Stiffer Penalties For Ponzi Scheme Operators
In response to the proliferation of financial scams and Ponzi schemes in Nigeria, the Act introduces stronger enforcement mechanisms.
It expressly prohibits unlawful investment schemes and prescribes stiffer penalties, including lengthy jail terms, for those found guilty of promoting or operating them.
This provision is a clear signal of the government’s commitment to cleaning up the investment landscape. The Act also includes provisions designed to protect market stability in times of financial distress.
Transactions involving market infrastructure—such as those processed through clearing houses or central counterparties—are now exempted from general insolvency laws.
Additionally, the SEC is empowered to monitor and manage systemic risks in the capital market to prevent the kind of widespread disruption that can result from financial shocks.
Interestingly, the Act has expanded the scope of the Investor Protection Fund (IPF) to cover more categories of investor losses, such as losses from the revocation or cancellation of a brokerage firm’s license, ensuring better compensation mechanisms and offering greater security to investors.
● Expansion Of Issuers To The Public
The Act expands the categories of issuers, as a key step towards the introduction of a wide range of innovative products and offerings as well as the facilitation of “commercial and investment business activities”, subject to the approval of the Commission and other controls stipulated in the Act.
This would promote innovation and broaden participation as the commission expands the range of entities allowed to issue securities to the public.
This move could lead to the introduction of more diverse financial products and potentially unlocking new forms of capital raising for both public and private sector players.
● Insolvency Provisions For Financial Market Infrastructures
The Act introduces provisions that exempt transactions facilitated through or otherwise involving Financial Market Infrastructures from the application of general insolvency laws.
● Independence Of Investment & Securities Tribunal
The Act strengthens the operations and independence of the Investments and Securities Tribunal.
It amends several provisions relating to the tribunal’s composition, jurisdiction, and appointment process.
These changes are intended to enhance the tribunal’s capacity to resolve capital market disputes efficiently and uphold investor rights.
● Issuance Of Securities By States, Local Govts
Salient provisions of the Act address existing restrictions in respect of raising of funds from the capital market by Sub-Nationals to allow for greater flexibility in this regard. State and local governments can now raise funds through the capital markets for public projects like infrastructure or healthcare.
This is expected to reduce their reliance on federal allocations or debt, fostering economic development at sub-national levels while increasing transparency in fund utilization.
● Transparency In Securities Transactions
Transparency is another central theme of the Act. The law mandates the use of Legal Entity Identifiers (LEIs) for all market participants involved in securities transactions.
LEIs are globally recognized tools used to improve traceability and transparency, making it easier to monitor the flow of funds and identify potential risks or irregularities.
By introducing the mandatory use of Legal Entity Identifiers (LEIs) by participants in capital market transactions, the Act would help to improve transparency in the conduct of securities transactions.
● Classification Of Exchanges Into Two Broad Categories
One of the pivotal reforms introduced by the ISA 2025 is the classification of exchanges into Composite and Non-composite categories.
Composite exchanges are allowed to list and trade all categories of securities and products, while Non-composite exchanges are limited to specific asset classes.
Additionally, the Act provides a legal framework for regulating financial market infrastructures such as clearing houses, trade depositories, and central counterparties—critical components of a well-functioning capital market.
● Regulatory Clarity For Digital Assets
The law also brings much-needed regulatory clarity to the digital asset space. For the first time, virtual assets and investment contracts are formally recognized as securities.
This move places Virtual Asset Service Providers (VASPs), Digital Asset Operators (DAOPs), and Digital Asset Exchanges under the regulatory oversight of the SEC.
With this inclusion, the SEC hopes to ensure stronger investor protection, increase accountability, and prevent abuse in this emerging and fast-evolving sector.
●Management Of Systemic Risk.
The Act introduces provisions for the monitoring, management and mitigation of systemic risk in the Nigerian capital market.
Speaking on the provisions of the newly signed Act, the Director of the Institute of Capital Market Studies at the Nasarawa State University Keffi, Prof Uche Uwaleke said the enactment of ISA 2024 is a welcome development that promises to modernize Nigeria’s investment and securities laws, improve regulatory oversight, protect investors, and support emerging financial technologies.
Uwaleke who is the President of the Capital Market Academics of Nigeria said the National Assembly Committees on the Capital Market, the Securities and Exchange Commission, and indeed the entire Capital Market community in Nigeria deserve a pat on the back for passing the legislation.
Also, the SEC Director-General, Dr. Emomotimi Agama, described the President’s assent as a significant boost for investor confidence and capital market development.
“The ISA 2025 reflects our commitment to building a dynamic, inclusive, and resilient capital market,” said Dr. Agama.
“By addressing regulatory gaps and introducing forward-looking provisions, the new Act empowers the SEC to foster innovation, protect investors more efficiently, and reposition Nigeria as a competitive destination for local and foreign investments.”
He commended the National Assembly for its patriotism and bipartisan support throughout the legislative process, adding that extensive stakeholder engagement helped shape the provisions of the law.
The SEC also acknowledged the critical role played by the Minister of Finance and Coordinating Minister of the Economy, as well as the Minister of State for Finance.
Their strategic policy guidance, according to the Commission, ensured that the new law is in harmony with the broader economic vision of the Tinubu administration.
Ten Key Capital Market Reforms To Be Driven By Newly Enacted Investment Securities Act is first published on The Whistler Newspaper
Source: The Whistler
