President Bola Ahmed Tinubu has recently signed the Investment and Securities Act (ISA) 2024 into law, marking a significant achievement in Nigeria’s capital market reform. This new law replaces the 2007 Investments and Securities Act, aiming to modernize and strengthen the regulatory framework for investments and market activities in the country.
The enactment has been described by the Securities and Exchange Commission (SEC) as a transformative step, enhancing investor protection, boosting market transparency, and promoting sustainable growth.
The ISA 2024 broadens the regulatory powers of the SEC, ensuring that Nigeria meets global standards set by organizations like the International Organization of Securities Commissions (IOSCO).
This will allow the SEC to maintain its credibility in global financial markets. Additionally, the Act introduces reforms that will modernize various aspects of the capital market, such as exchanges, digital assets, and commodity trading, ultimately positioning Nigeria’s markets more competitively.
One key reform is the classification of exchanges into Composite and Non-Composite categories. Composite exchanges will have the ability to list and trade all types of securities and products, whereas Non-Composite exchanges will be restricted to specific asset classes. Furthermore, the Act brings greater clarity to the regulation of digital assets, officially recognizing virtual assets and investment contracts as securities, and bringing them under the oversight of the SEC.
This inclusion aims to foster stronger investor protection and prevent abuse in the rapidly growing digital asset market.
The ISA 2024 also introduces legal frameworks for commodity exchanges and warehouse receipts, which are expected to drive growth in sectors like agriculture and mining. Moreover, the law expands opportunities for sub-national governments to raise funds from the capital markets, providing an alternative source of funding for infrastructure development.
A major highlight is the crackdown on Ponzi schemes and financial scams. The law introduces stronger enforcement mechanisms, with severe penalties for those involved in illegal investment schemes. Additionally, the Act ensures market stability, with provisions that exempt certain transactions from insolvency laws and allow the SEC to manage systemic risks in the capital market.
The law also mandates the use of Legal Entity Identifiers (LEIs) for all market participants, increasing traceability and transparency in financial transactions. The amendments to the Investments and Securities Tribunal will enhance the tribunal’s ability to resolve disputes efficiently and safeguard investor rights.
The SEC’s Director-General, Dr. Emomotimi Agama, hailed the signing as a significant step in rebuilding investor confidence and strengthening Nigeria’s capital markets. He emphasized that the ISA 2024 reflects the government’s commitment to fostering innovation and protecting investors, positioning Nigeria as a competitive destination for both local and foreign investments.
