Nigeria's Securities and Exchange Commission (SEC) is thrilled about President Bola Tinubu's approval of the Investments and Securities Act (ISA) 2024.
“This landmark legislation strengthens the legal framework of the Nigerian capital market, enhances investor protection and introduces critical reforms to promote market integrity, transparency and sustainable growth,’ SEC said in a statement issued on Saturday.
The enactment of the ISA 2024 reaffirms the authority of the SEC as the apex regulatory authority of the Nigerian Capital Market.
The new Act also introduces transformative provisions to further align Nigeria’s market operations with international best practice.
The statement reads “The Securities and Exchange Commission (SEC) is pleased to announce that President Bola Tinubu has assented to the Investments and Securities Act (ISA) 2024, which repeals the Investments and Securities Act No. 29 of 2007.”
Dr. Emomotimi Agama, Director-General of the SEC, praised the President's approval, calling it a transformative step for the capital market.
Agama said, “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 SEC to foster innovation, protect investors more efficiently and reposition Nigeria as a competitive destination for local and foreign investments.
“We commend all stakeholders within and outside the capital market community for their unwavering solidarity towards the achievement of this historic milestone.
“We solicit their continued collaboration in respect of the effective implementation of the ISA 2024 for the benefit of our economy.
“SEC extends its profound appreciation to the National Assembly for its patriotism and dedication in enacting this new legal framework for the Nigerian capital market.”
Agama emphasized the National Assembly's commitment to economic growth and investor confidence, highlighting the meticulous deliberations, extensive stakeholder engagements, and bi-partisan support that characterized the legislative process.
“We also commend the Honourable Minister of Finance and Coordinating Minister of the Economy of Nigeria as well as the Minister of State for Finance for their invaluable contributions to the realisation of this groundbreaking project.
“Their strategic guidance, policy expertise and steadfast support have ensured that the ISA 2024 aligns with Nigeria’s broader economic objectives.
“The SEC would continue to engage with market operators, investors, and all stakeholders to ensure a seamless transition from the repealed ISA 2007 to the new legal regime established under the ISA 2024,” he said.
The Securities and Exchange Commission (SEC) in Nigeria has been empowered with enhanced regulatory authority, aligning with global standards set by IOSCO. This strengthens the SEC's position as a "Signatory A" member of IOSCO and makes the Nigerian capital market more attractive to investors.
The new Investment and Securities Act (ISA) 2024 introduces significant changes, including:
Classification of Exchanges: Exchanges are now categorized as Composite and Non-composite.
Composite Exchanges allow for the listing and trading of all types of securities and products.
Non-composite Exchanges focus on a specific type of security or product.
Financial Market Infrastructures: The ISA 2024 includes provisions related to Financial Market Infrastructures, which are crucial for the smooth functioning of the capital market.
These changes are intended to modernize the Nigerian capital market and ensure its stability and growth.
The Investment and Securities Act 2023 brings significant changes to the Nigerian capital market, impacting various areas like:
Financial Market Infrastructures: It introduces new provisions for Central Counter Parties, Clearing Houses, and Trade Depositories.
Digital Assets: The Act explicitly recognizes virtual/digital assets and investment contracts as securities. This brings Virtual Asset Service Providers (VASPs), Digital Asset Operators (DAOPs), and Digital Asset Exchanges under the Securities and Exchange Commission (SEC)'s regulatory umbrella.
Insolvency Exemption: Transactions facilitated through Financial Market Infrastructures are now exempt from general insolvency laws.
Systemic Risk Management: The Act introduces provisions for monitoring, managing, and mitigating systemic risk in the Nigerian capital market.
Issuer Expansion: The Act expands the categories of issuers, paving the way for innovative products and offerings, as well as facilitating commercial and investment business activities under the SEC's approval.
Commodities Regulation: A new part of the Act focuses on regulating Commodities Exchanges and Warehouse Receipts, fostering the development of the entire Commodities ecosystem.
Sub-National Funding: The Act addresses existing restrictions on Sub-Nationals raising funds from the capital market, allowing for greater flexibility.
This new Act aims to make capital markets more transparent by requiring participants to use Legal Entity Identifiers (LEIs). This will help track transactions more easily.
The Act also takes a strong stance against Ponzi schemes and other illegal investment schemes, with severe penalties for those involved.
Finally, the Act updates the Tribunal's structure and powers to ensure it can effectively enforce regulations.
