Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC), yesterday indicated that it has started the implementation of the newly enacted Investments and Securities Act, 2025 (ISA 2025).
President Bola Tinubu had earlier this month signed into law the new Investment and Securities Act (ISA) 2025, which repealed the Investments and Securities Act No. 29 of 2007.
SEC yesterday stated that in line with the new ISA 2025, it is now illegal to operate digital asset exchanges or online foreign exchange trading platforms without formal registration with the Commission.
SEC called on stakeholders in the financial and investment ecosystem to familiarise themselves with the new provisions and ensure full compliance with the new Act.
“By virtue of this Act, it is an offence in Nigeria for any entity that is not registered by the Commission to carry out the business of online foreign exchange trading platforms or related services.
“Any business entity with the plan of setting up a business in any of this area is advised to visit the HOD, DRM Department of the Commission for further directive on how to register with the Commission to avoid sanctions,” SEC stated.
According to SEC, under the newly enacted legislation, the Commission is now empowered to regulate a broader scope of market activities as Section 3(3)(b) of the Act explicitly mandates the Commission to “register and regulate securities exchanges, commodity exchanges, virtual and digital asset exchanges, and other market venues”.
Director-General, Securities and Exchange Commission, Dr. Emomotimi Agama, described the new law as a landmark step in positioning Nigeria’s capital market to be more inclusive, robust, and in tune with global best practices.
“The ISA 2025 has given the Commission the legal backing to provide clarity, ensure investor protection, and enhance market confidence, especially in new and previously unregulated segments such as digital asset exchanges and online foreign exchange platforms,” Agama said.
He reaffirmed his commitment to supporting innovation while maintaining strict oversight.
“We welcome innovation, but it must occur within a regulated environment that protects investors and maintains the integrity of our market,” Agama said.
The new Act introduced critical reforms to promote market integrity, transparency, and sustainable growth, while enhancing the authority of the SEC as the apex regulatory authority of the Nigerian capital market.
With such enhanced powers and functions, Nigeria is now fully in conformity with the requirements of International Organisation of Securities Commission (IOSCO)’s Enhanced Multilateral Memorandum of Understanding (EMMoU). This EMMoU enables Nigeria to retain its “Signatory A” status, thus enhancing the overall attractiveness of the Nigerian capital market.
There were several notable provisions that made ISA 2025 a landmark legislation. The Act expands the definition and understanding of securities by explicitly recognising virtual and digital assets as well as investment contracts as securities and brings Virtual Asset Service Providers (VASPs), Digital Asset Operators (DAOPs) and Digital Asset Exchanges under the SEC’s regulatory purview.
There is also legal framework for commodities exchanges. The Act contains a new part which provides for the regulation of commodities exchanges and warehouse receipts. These provisions are essential to allow for the development of the entire gamut of the commodities ecosystem.
In the area of issuance of securities by sub-nationals and their agencies, salient provisions of the Act address existing restrictions in respect of raising of funds from the capital market by sub-nationals to allow for greater flexibility in this regard.
In terms of transparency in securities transactions, the new Act introduces the mandatory use of Legal Entity Identifiers (LEIs) by participants in capital market transactions. This stipulation is designed to improve transparency in the conduct of securities transactions.
In a major enhancement of investor protection, the Act expressly prohibits Ponzi Schemes and other unlawful investment schemes, while prescribing stringent jail terms and other sanctions for the promoters of such schemes.
It also strengthens the Investments and Securities Tribunal (IST) by amending some key provisions in the repealed ISA 2007 pertaining to the composition of the tribunal, constitution of the tribunal, qualification and appointment of the chief registrar as well as the jurisdiction of the tribunal to enhance the ability of the tribunal to optimally discharge its mandate.
ISA 2025 expands the category of issuers to the public, a key step towards the introduction of a wide range of innovative products and offerings as well as the facilitation of “commercial and investment business activities”, subject to the approval of SEC and other controls stipulated in the Act.
In the area of classification of exchanges and inclusion of provisions on financial market infrastructures, the Act classifies securities exchanges into composite and non-composite exchanges. A composite exchange is one in which all categories of securities and products can be listed and traded, while a non-composite exchange focuses on a singular type of security or product. There are also new provisions on financial market infrastructures such as central counter parties, clearing houses and trade depositories.
It also provides comprehensive insolvency provisions for financial market infrastructures by introducing provisions that exempt transactions facilitated through or otherwise involving financial market infrastructures from the application of general insolvency laws.
In the area of management of systemic risk, the Act introduces provisions for the monitoring, management and mitigation of systemic risk in the Nigerian capital market.
Stakeholders and experts said the new Act would usher in a new era of dramatic growth and development for the Nigerian capital market and the economy generally.
SOURCE: THE NATION
