ALIGNING WITH GLOBAL FINANCE: NIGERIA’S INVESTMENT AND SECURITIES ACT 2025 AS A GATEWAY FOR FOREIGN INVESTORS

Table of Contents

INTRODUCTION

Nigeria’s capital market has long been recognized for its scale and potential, yet it has struggled to compete globally due to regulatory ambiguity and outdated infrastructure. The Investment and Securities Act 2025 (ISA 2025) addresses these issues decisively. Repealing the 2007 Act, ISA 2025 establishes a forward-looking legal framework that aligns Nigeria’s capital market regulation with global standards, particularly those of the International Organization of Securities Commissions(IOSCO).

IOSCO, the global standard-setter for securities regulation, is built on three core objectives:

                    i.        Investor protection

                   ii.        Ensuring fair, efficient, and transparent markets

                  iii.        Reducing systemic risk

 

ISA 2025 embodies these objectives in both substance and structure. For international investors, this alignment is not just regulatory housekeeping; it is a strategic signal – Nigeria is ready for global capital.

 

1.    ENHANCING INVESTOR PROTECTION: SECTIONS 196, 357, AND 315

Foreign investors prioritize the safety of their capital, especially in emerging markets. ISA 2025 addresses this through multiple mechanisms:

a.    Codified Anti-Fraud Measures: The Act explicitly prohibits unlicensed investment schemes, including Ponzi operations, and empowers the SEC to investigate, freeze, and forfeit assets linked to such schemes. The minimum penalty? A N20,000,000.00 (Twenty Million Naira) fine or up to 10 years in prison.[1]

 

b.    Digital Asset Regulation: Recognizing the proliferation of digital assets, ISA 2025 brings Virtual Asset Service Providers (VASPs), exchanges, and tokenized securities into the formal regulatory net. By requiring licensing, due diligence, and full disclosures, the Act provides foreign institutional investors with legal certainty.[2]

c.     Reinforcing the Investments and Securities Tribunal: The expansion of the IST’s membership from 10 to 12 members and jurisdiction, including over digital securities and complex financial instruments provides a specialized forum for efficient dispute resolution.[3]

This change aims to enhance the Tribunal’s capacity to handle increasing complexity and volume of capital market disputes.

These investor-focused safeguards closely align with IOSCO Principles 1-8, which demand that investors be treated fairly, be provided with full disclosure, and have access to redress.

 

 

2.    PROMOTING FAIR, EFFICIENT, AND TRANSPARENT MARKETS: SECTIONS 27, 46, 313, AND 57

Market efficiency and transparency are essential for foreign portfolio managers, institutional funds, and development finance institutions seeking credible entry points.

a.    Strengthening Market Infrastructure: ISA 2025 formally recognizes Financial Market Infrastructures (FMIs) such as FMDQ Clear and the Central Securities Clearing System (CSCS), aligning Nigeria’s post-trade ecosystem with international norms.[4]

 

b.  Broadening Issuer Access: The Act opens the market to a wider array of issuers, including private companies, securitized asset pools, and fintech platforms, subject to SEC’s approval.[5]

 

c.  Mandatory Legal Entity Identifiers (LEIs): In line with global transparency protocols, the SEC can now require regulated entities and institutional investors to use LEIs.[6]

Together, these reforms implement IOSCO Principles 16-24, which demand full, fair, and timely disclosure of financial information and robust secondary market oversight.

 

3.    SYSTEMIC RISK OVERSIGHT AND MARKET INTEGRITY

Reducing systemic risk is key to attracting large scale institutional investment. ISA 2025 gives the SEC explicit authority to monitor and address market-wide vulnerabilities:

a.    Supervisory Powers: The SEC can now compel capital market participants to submit real-time data and documents necessary for systemic risk analysis.[7]

 

b.    Fintech and Digital Assets Compliance Framework: Nigeria’s proactive stance via ISA 2025 places it ahead of several emerging markets. Foreign digital asset managers and Web3 investment platforms can operate within a defined legal perimeter.

These elements build systemic trust and allow investors to confidently engage in higher order instruments, such as derivatives, digital securities, and multi-party investment vehicles within a supervised environment.

 

4.    BUILDING INTERNATIONAL CONFIDENCE THROUGH REGULATORY ALIGNMENT

One of the most powerful signals to foreign investors is a jurisdiction’s willingness to align with evolving global standards. IOSCO encourages member countries to continually review and update their securities laws to reflect international norms and technological change. The enactment of Nigeria’s ISA 2025 is a direct response to that imperative.

By repealing the outdated ISA 2007 and replacing it with a more comprehensive and globally attuned framework, Nigeria demonstrates its commitment to regulatory modernization, which is central to IOSCO’s Principles 1 and 2 on regulatory responsibilities and cooperation. This proactive reform fosters legal certainty for investors, improves cross-border compatibility, and enhances the credibility of Nigeria’s markets in the eyes of global institutional investors.

In essence, the very act of legislative overhaul not just the content sends a clear message: Nigeria is ready to compete in the global capital market by playing by international rules.

 

CONCLUSION: A MARKET ALIGNED FOR GLOBAL CAPITAL

The Investment and Securities Act 2025 is more than a legislative update; it is Nigeria’s regulatory passport to deeper integration with the global financial system.

Through investor protection, transparent market oversight, and systemic risk management each a pillar of IOSCO’s core principles – ISA 2025 gives foreign investors the three elements they value most: confidence, clarity, and compliance.

 



[1] Section 196 and 357 of ISA 2025 set out enhanced penalties for Ponzi schemes and unlicensed platforms.

[2] Section 357 regulates Virtual Asset Service Providers and related innovations.

[3] Sections 315 and 316 expand the IST’s jurisdiction and operational capacity.

 

[4] Section 46 recognizes Financial Market Infrastructures (FMIs) like CSCS and FMDQ Clear.

[5] Section 57 expands the class of eligible issuers in Nigeria’s capital market.

[6] Section 313 allows the SEC to enforce LEI compliance for greater transparency.

 

[7] Section 84 (1) b

Please do not treat the foregoing as legal advice as it only represents the public commentary views of the authors. All enquiries about this should please be directed at the key contacts

AUTHORS

‘Mobola Tejuoso

Partner

Alero Ejeye

Associate

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