President Bola Ahmed Tinubu has signed the Investment and Securities Act (ISA) 2024 into law, 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, strengthens 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.
Strengthening the Capital Market Framework
The enactment of the ISA 2024 reaffirms SEC's authority as the apex regulator of Nigeria's capital markets and introduces significant reforms to align local operations with international best practices.
One of the key advancements is the expansion of SEC's regulatory powers to meet global standards, including maintaining its "Signatory A" status under the International Organization of Securities Commissions (IOSCO) Enhanced Multilateral Memorandum of Understanding (EMMoU). This status is crucial for Nigeria's credibility in global financial markets.
Key Highlights of ISA 2024
The ISA 2024 introduces several structural reforms and innovations, including:
Classification of Exchanges: Exchanges are now categorized as Composite and Non-composite. Composite exchanges can list and trade all categories of securities, while Non-composite exchanges are limited to specific asset classes.
Regulation of Financial Market Infrastructure: The Act provides a legal framework for regulating financial market infrastructures such as clearing houses, trade depositories, and central counterparties, ensuring a more secure and efficient market structure.
Recognition of Digital Assets: The law formally recognizes virtual assets and investment contracts as securities, placing Virtual Asset Service Providers (VASPs), Digital Asset Operators (DAOPs), and Digital Asset Exchanges under SEC oversight. This move enhances investor protection and accountability in the rapidly evolving digital finance sector.
Commodity Market Reforms: The Act introduces a legal framework for commodity exchanges and warehouse receipts to stimulate growth in agriculture, mining, and other commodity-dependent industries.
Sub-national Fundraising: The ISA 2024 grants greater flexibility to state governments and agencies to raise funds through the capital market, opening new financing windows for infrastructure development.
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Combating Fraudulent Schemes: To tackle financial scams and Ponzi schemes, the law imposes stricter penalties, including lengthy jail terms for offenders, reinforcing the government's commitment to market integrity.
Market Stability and Risk Management: The Act exempts transactions involving market infrastructure from general insolvency laws and empowers the SEC to monitor systemic risks to prevent financial disruptions.
Enhancing Transparency: The law mandates the use of Legal Entity Identifiers (LEIs) for market participants, improving traceability and transparency in securities transactions.
SEC and Stakeholders Welcome the Development
SEC Director-General, Dr. Emomotimi Agama, described the signing of the ISA 2024 as a significant step toward bolstering investor confidence and market development.
"The ISA 2024 reflects our commitment to building a dynamic, inclusive, and resilient capital market. 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 stated.
The Commission acknowledged the support of the National Assembly, the Honourable Minister of Finance and Coordinating Minister of the Economy, and the Minister of State for Finance in shaping the law in alignment with Nigeria's broader economic vision.
Implications for Nigeria's Capital Market
The ISA 2024 is expected to attract increased investment into Nigeria's capital markets by providing a clearer regulatory framework, particularly for digital assets and commodities. It enhances investor protection mechanisms, ensures greater transparency, and promotes a level playing field for issuers, exchanges, and market operators.
With these reforms, Nigeria moves closer to building a world-class capital market that is inclusive, innovative, and resilient, reinforcing its position as a leading financial hub in Africa.
