In a landmark move aimed at transforming Nigeria’s financial landscape, President Bola Ahmed Tinubu has officially signed the Investment and Securities Act (ISA) 2024 into law.
This new legislation replaces the Investments and Securities Act No. 29 of 2007, introducing comprehensive reforms designed to strengthen the country’s capital market framework, enhance investor protection, and improve regulatory oversight.
The Securities and Exchange Commission (SEC) hailed the signing as a major step toward market transparency, stability, and sustainable economic growth, reinforcing Nigeria’s position in the global financial ecosystem.
Strengthening Nigeria’s Capital Market with a Modernized Framework
The ISA 2024 expands the SEC’s regulatory powers, aligning them with global standards set by the International Organization of Securities Commissions (IOSCO). By doing so, Nigeria aims to maintain its “Signatory A” status under IOSCO’s Enhanced Multilateral Memorandum of Understanding (EMMoU)—a crucial benchmark that enhances the nation’s credibility in international financial markets.
The Act introduces structural changes that will impact stock exchanges, digital asset operators, commodities trading, and systemic risk management, setting the stage for a more dynamic and secure investment environment.
Key Highlights of the ISA 2024
1. New Market Structure for Stock Exchanges
The law categorizes stock exchanges into Composite and Non-Composite exchanges:
- Composite Exchanges – Authorized to trade all categories of securities and financial products.
- Non-Composite Exchanges – Limited to specific asset classes.
This distinction aims to diversify investment opportunities while maintaining a well-regulated market.
2. Clear Regulatory Framework for Digital Assets
For the first time in Nigeria, the ISA 2024 formally recognizes virtual assets and investment contracts as securities. This means that:
- Virtual Asset Service Providers (VASPs)
- Digital Asset Operators (DAOPs)
- Digital Asset Exchanges
All now fall under the regulatory oversight of the SEC. This move enhances investor protection, increases transparency, and mitigates risks in the rapidly evolving cryptocurrency and digital finance sectors.
3. Strengthening Commodity Markets and Economic Growth
The Act introduces a legal framework for commodity exchanges and warehouse receipts, a significant development for industries such as agriculture, mining, and manufacturing. This reform is expected to:
- Facilitate structured financing for commodity traders.
- Reduce risks for investors and market participants.
- Encourage economic diversification beyond oil dependency.
4. Expanding Fundraising Opportunities for State Governments
Under the ISA 2024, sub-national governments (states and local governments) now have more flexibility to raise funds through the capital market. This provision could provide alternative financing for infrastructure projects without over-reliance on federal allocations or expensive commercial loans.
5. Crackdown on Ponzi Schemes and Fraudulent Investment Schemes
With investment scams on the rise, the new law introduces stricter enforcement mechanisms to curb illegal financial activities. The ISA 2024:
- Prohibits unauthorized investment schemes.
- Prescribes harsher penalties, including long-term imprisonment, for operators of fraudulent schemes.
- Strengthens the SEC’s power to monitor, investigate, and prosecute offenders.
This provision signals a zero-tolerance policy against financial fraud, restoring investor confidence in Nigeria’s capital market.
6. Legal Protections for Market Stability
The Act introduces safeguards to protect market infrastructure from financial distress. Transactions conducted through clearing houses, trade depositories, and central counterparties are now exempt from general insolvency laws, ensuring the stability of market operations even during economic turbulence.
Additionally, the SEC is now empowered to monitor and manage systemic risks—a crucial measure to prevent financial shocks that could destabilize the market.
7. Encouraging Capital Market Innovation and Transparency
The new law broadens the scope of who can issue securities, paving the way for diverse financial products. Furthermore, the mandatory use of Legal Entity Identifiers (LEIs) will enhance market transparency by improving the traceability of transactions, making it easier to detect irregularities and prevent market manipulation.
8. Strengthening the Investments and Securities Tribunal
The Act also bolsters the Independence and Efficiency of the Investments and Securities Tribunal, refining:
- Composition and appointment processes.
- Jurisdictional authority.
- Case resolution mechanisms.
This reform ensures faster dispute resolution and strengthens legal protections for investors and capital market participants.
Stakeholders Applaud the Investment and Securities Act 2024
Reacting to the development, SEC Director-General, Dr. Emomotimi Agama, described the law as a turning point for Nigeria’s investment landscape, stating:
“The ISA 2024 reflects our commitment to building a dynamic, inclusive, and resilient capital market. By addressing regulatory gaps and introducing forward-looking provisions, this law empowers the SEC to foster innovation, protect investors, and position Nigeria as a competitive investment hub.”
He also praised the National Assembly for its bipartisan cooperation in passing the bill, as well as the Finance Ministry for its strategic policy direction, which helped ensure the new law aligns with the Tinubu administration’s broader economic vision.
What This Means for Nigeria’s Capital Market
The signing of the ISA 2024 is expected to:
- Attract both local and international investors by creating a more transparent and predictable market.
- Encourage innovation by providing a structured framework for digital assets and fintech investments.
- Improve access to capital for businesses and government entities.
- Strengthen investor confidence by introducing tighter regulations against fraud and financial malpractice.
A Milestone for Nigeria’s Economic Future
With the enactment of the Investment and Securities Act 2024, Nigeria takes a major step forward in modernizing its capital market. By implementing global best practices, cracking down on fraudulent investment schemes, and enhancing financial transparency, the new law sets the foundation for a more resilient, innovative, and globally competitive market.
As Nigeria moves toward economic diversification and financial inclusion, the ISA 2024 serves as a crucial tool to drive capital formation, foster investor trust, and unlock new opportunities for sustainable growth.
