The Investment and Securities Act 2025: How It’s Reshaping Nigeria’s Capital Markets

The passage of the Investment and Securities Act (ISA) 2025 marks one of the most significant regulatory overhauls in Nigeria’s financial system in nearly two decades. Replacing the 2007 Act, the new legislation modernizes the country’s capital markets, aligns regulatory frameworks with global best practices, and significantly expands the powers of the Securities and Exchange Commission (SEC). For investors, businesses, and financial institutions, the ISA 2025 represents a transformative shift, one that could redefine Nigeria’s position in Africa’s financial landscape. 

Key Reforms in the ISA 2025 

1. Regulation of Digital Securities and Virtual Assets 

Among the most innovative aspects of the ISA 2025 is that it expressly acknowledges virtual assets and digital investment contracts as securities. The development reflects the rapid growth of cryptocurrencies, tokenized assets, and blockchain-based financial products in Nigeria. It offers regulatory clarity to Web3 startups, crypto exchanges, and decentralized finance ( DeFi ) platforms, which are in dire need of regulatory clarity by placing them under SEC jurisdiction. 

2. Empowered Enforcement and Investor Protection 

The ISA 2025 greatly enhances the enforcement authority of SEC and allows them to exercise a closer monitoring of market behavior. The most important improvements are: 

Increased penalties on market manipulation, insider trading and fraudulent disclosures 

- Increased disclosure requirements of public companies and investment schemes 

Greater whistleblower protection to motivate whistleblowing of wrongdoing 

3. Improved Framework on Collective Investment and Commodity Markets 

The Act proposes significant reforms to collective investment schemes (CIS), such as mutual funds, private equity and venture capital. It simplifies the process of registration, and it introduces more stringent governance requirements on fund managers. This may catalyze the asset management business in Nigeria, as the industry has been experiencing low penetration relative to other African economies such as South Africa and Kenya. 

4. Better Corporate Governance and Transparency of the Markets 

The new legislation further strengthens corporate governance regulation of publicly traded firms, and requires: 

- Increased independence of the board 

-Better audit and financial reporting standards 

-Increased rights of shareholders, such as the protection of minority investors 

These provisions bring Nigeria in line with international standards including the OECD Principles of Corporate Governance so that Nigerian markets are more appealing to foreign portfolio investors (FPIs). Better transparency may also serve to minimize the valuation discount that Nigerian stocks tend to be subjected to because of governance issues.

Challenges and Implementation Risks 

1. Regulatory Overlap and Coordination 

The SEC must work closely with other regulators, including the CBN, Nigerian Communications Commission (NCC), and National Insurance Commission (NAICOM), to avoid conflicts. For instance, crypto regulation may still require coordination with the CBN, which oversees payment systems. Similarly, fintech firms offering hybrid financial products could face overlapping oversight. 

2. Capacity and Enforcement Gaps 

While the law grants SEC greater authority, the commission must strengthen its technical capacity to monitor complex financial instruments like derivatives, digital assets, and cross-border securities. Without adequate enforcement resources, some provisions may remain ineffective. 

3. Market Adaptation and Compliance Costs 

Smaller brokerage firms, fintech startups, and fund managers may struggle with higher compliance costs under the new regime. If not carefully managed, this could reduce market participation rather than expand it.    

The Investment and Securities Act 2025 is a bold step toward modernizing Nigeria’s financial markets. By addressing digital assets, investor protection, and market diversification, it lays the groundwork for a more dynamic and resilient economy. However, its success hinges on effective enforcement, regulatory harmony, and private sector collaboration. If these elements align, Nigeria could enter a new era of capital market growth, unlocking opportunities for businesses and investors alike.