President Bola Ahmed Tinubu has signed into law the Investment and Securities Act (ISA) 2025, marking a major milestone in Nigeria’s capital market reform.
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 Securities and Exchange Commission (SEC), in a statement released on Friday, described the presidential assent as a “transformative step” toward enhancing investor protection, improving market transparency, and fostering sustainable growth.
The enactment of the ISA 2025, according to the 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.
A modern framework for a dynamic market
One of the major achievements of the ISA 2025 is the expansion of SEC’s regulatory powers to meet the standards of global bodies such as the International Organization of Securities Commissions (IOSCO).
The SEC stated that the enhanced regulatory powers would allow it to maintain its “Signatory A” status under IOSCO’s Enhanced Multilateral Memorandum of Understanding (EMMoU), a critical benchmark for credibility in global financial markets.
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.
Key highlights of the ISA 2025
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.
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.
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.
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.
To promote innovation and broaden participation, the ISA 2025 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 unlock new forms of capital raising for both public and private sector players.
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.
Lastly, 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.
SEC, stakeholders hail the development
Speaking on the development, 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 Honourable 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.
What this means for Nigeria’s capital market
The ISA 2025 is expected to spur renewed interest in Nigeria’s capital markets from both local and international investors.
- By creating a clearer regulatory framework for emerging asset classes, especially digital assets and commodities, and by improving investor protection mechanisms, the Act sets the stage for deeper capital formation and economic diversification.
- It also provides a more level playing field for issuers, exchanges, and operators, while giving regulators the tools they need to clamp down on bad actors and illegal schemes that have dented the credibility of the market in the past.
- With the signing of the ISA 2025 into law, Nigeria takes a significant leap forward in its journey toward building a world-class capital market that is inclusive, innovative, and resilient.
