Almost two decades later, Nigeria has signed a new Investment and Securities Act (ISA 2025) into law.
The Investments and Securities Act (ISA) is the primary legislation governing Nigeria’s capital markets. It establishes the regulatory framework for investments and securities transactions, ensuring transparency, investor protection, and market integrity.
With the rise of digital assets, evolving market structures, and increasing concerns about investor protection, the need for a modernized regulatory framework became clear. This groundbreaking update to the 2007 legislation introduces key reforms to enhance market transparency, improve investor confidence, and align Nigeria’s capital market with global best practices.
Here’s a highlight of what has changed with this new act.
1. Enhanced Regulatory Powers for SEC: The Act strengthens the Securities and Exchange Commission’s (SEC) authority, aligning it with international standards set by the International Organization of Securities Commissions (IOSCO). This alignment helps the SEC maintain its “Signatory A” status, bolstering investor confidence. Furthermore, the new provisions expand the Commission’s surveillance capability with access to critical data and the ability to track illegal activity and enforce compliance.
2. Recognition of Digital Assets as Securities: The Act broadens the scope and definition of securities to include virtual and digital assets such as cryptocurrencies and investment contracts. Virtual assets, such as Cryptocurrencies, Digital Asset Tokens, Stablecoins, and NFTs, are now officially classified as securities. This classification brings Virtual Asset Service Providers (VASPs), Digital Asset Operators (DAOPs), and Digital Asset Exchanges under SEC’s regulatory oversight, ensuring transparency and investor protection in the digital asset space.
3. Classification of Securities Exchanges: The Act differentiates between Composite and Non-Composite Exchanges. Composite Exchanges can list and trade all categories of securities, while Non-Composite Exchanges focus on specific types of securities or products. By differentiating the various exchanges, the Act seeks to foster efficiency and innovation. While non-composite exchanges might appeal to niche investors and institutions looking for targeted opportunities, composite exchanges can attract investors looking for a broader array of securities. This classification aims to streamline market operations.
4. Legal Framework for Commodities Exchanges: A new section was introduced that provides a legal framework for the regulation of Commodities Exchanges, collateral management companies and warehouses that issue Warehouse receipts. Commodities contracts and derivatives are classified as securities and regulated by the commission. This development is expected to stimulate activities in the commodities sector, offering structured financing and reducing market risks.
5. Fraud and Ponzi schemes: The Act empowers the SEC to prosecute Ponzi scheme operators, with penalties including 10-year prison sentences and fines of up to ₦40 million. It also allows the SEC to recover profits gained through fraudulent activities, ensuring restitution for affected investors. The new act also addresses transparency at the transaction level by making it mandatory for every party in a financial transaction to own a Legal Entity Identifier (LEI) and disclose the same in every securities transaction it is involved in to enhance counterparty due diligence. These measures aim to strengthen investor protection and maintain capital market integrity.
6. Expansion of Issuer Categories: The Act broadens the categories of entities eligible to issue securities to the public subject to the approval of the Commission and other controls stipulated in the Act. This expansion is designed to introduce a wider range of financial products and facilitate diverse investment opportunities while ensuring adherence to regulatory standards. Examples of newly recognized potential issuers are Digital or Virtual assets Issuers and non-traditional Issuers such as Crowdfunding platforms and Fintechs. Government entities and private organizations involved in infrastructure projects can issue securities to raise funds, fostering economic development
7. Strengthening the Investments and Securities Tribunal (IST): Amendments have been made to improve the composition, constitution, and jurisdiction of the Investments and Securities Tribunal. The IST’s jurisdiction has now been expanded to cover disputes related to digital assets, investment contracts, and other securities newly recognized under the Act. These changes aim to enhance the tribunal’s efficiency in resolving disputes and also address emerging issues in the evolving Nigerian financial landscape.
8. Management of Systemic Risk: The Act introduces provisions for the monitoring, management, and mitigation of systemic risk in the Nigerian capital market. Particularly, guidelines for financial market infrastructures, such as Central Counter Parties, Clearing Houses, and Trade Depositories, are now explicitly addressed. The SEC is tasked with monitoring their operations to ensure compliance with global standards and reduce systemic risks using measures including mandating FMIs on robust reporting and implementation of rigorous risk management framework in line with global standards.
9. Mergers, Takeovers, and Corporate Restructuring: The Act made provisions related to mergers, takeovers, and corporate restructuring aimed at fostering a more structured and regulated process for such corporate activities. To ensure that all shareholders are fairly and equitably treated and given sufficient information regarding such transactions. The Act provides for collaboration between the Securities and Exchange Commission (SEC) and the Federal Competition and Consumer Protection Commission (FCCPC) to prevent anti-competitive practices in mergers and acquisitions.
10. Enhanced Fundraising Options for Sub-National Governments: State governments and agencies now have greater flexibility in raising funds through the capital market, providing new financing opportunities for infrastructure development beyond federal allocations and commercial borrowing. The Act mandates that fundraising activities by sub-national entities adhere to strict regulatory guidelines to ensure transparency and accountability. By aligning sub-national fundraising with global best practices, the Act ensures that these entities can attract both local and international investors.
Conclusion
The Investment and Securities Act 2025 represents a significant step forward in strengthening Nigeria’s capital market. By modernizing regulations, expanding investor protections, and embracing new asset classes such as digital securities, the Act ensures a more secure, transparent, and globally competitive investment landscape. These reforms are set to create new opportunities for both individual and institutional investors, fostering economic growth and financial inclusion. At Sycamore, we’re excited about what this means for our investors—and we’re ready.
At Sycamore Investment Management Limited (SIML), a SEC-licensed investment firm, we are committed to helping investors navigate this evolving landscape with a range of tailored investment solutions, including:
- Portfolio Management: For those seeking professionally managed investment portfolios.
- Sycamore Premium Yield Investment: For investors looking for high returns.
- Sycamore Enhanced Dollar Investment: For those who want to invest and earn in US dollars.
- Sycamore Education Trust Investment: For individuals building a fund for future educational needs.
- Direct Investments: In commercial papers, Treasury bills, savings bonds, FGN bonds, corporate bonds, and Eurobonds.
With these offerings, SIML empowers you to grow your wealth confidently while taking advantage of the latest developments in Nigeria’s capital market. Whether you’re a seasoned investor or just starting, our expert team is here to guide you toward achieving your financial goals.
