By Chukwuma Umeorah
The recent enactment of the Investments and Securities Act (ISA) 2025 has been widely hailed as a transformative piece of legislation that will usher in a new era for Nigeria’s capital market. Signed into law by President Bola Tinubu, the Act replaces the long-standing ISA 2007, introducing a suite of reforms aimed at modernising the regulatory landscape, strengthening investor protection, and aligning Nigeria’s capital market with global best practices.
Stakeholders across the financial ecosystem—from regulators and market operators to policy experts—have lauded the new Act for its forward-looking provisions that promise to attract both foreign and domestic capital. It expands the powers of the Securities and Exchange Commission (SEC), introduces clear rules for digital assets, strengthens investor protection, and creates more funding opportunities for businesses and governments.
Investor protection is core of the reform
Investor protection is at the core of ISA 2025. The Investor Protection Fund (IPF) has been significantly enhanced to provide compensation not only in cases of insolvency or broker negligence—as was the case under ISA 2007—but also when a broker’s registration is revoked or cancelled for regulatory breaches. This ensures investors are better shielded from systemic risks and market disruptions. The Investments and Securities Tribunal (IST) has also been restructured to deliver more efficient dispute resolution. Reforms in the tribunal’s composition, jurisdiction, and appointment process are aimed at expediting legal proceedings and ensuring justice for market participants.
President and Chairman of the Council of the Chartered Institute of Stockbrokers (CIS), Oluropo Dada, said the Act represents “a collective commitment to transparency, efficiency, and stability. We are confident that this Act will deepen market integrity, boost investor confidence, and expand the range of investment opportunities available to Nigerians and global investors alike,” he said.
Digital assets and market innovation
One of the most groundbreaking features of ISA 2025 is its official recognition of digital assets and investment contracts as securities. This brings Virtual Asset Service Providers (VASPs), Digital Asset Operators (DAOPs), and Digital Asset Exchanges under the regulatory purview of the SEC. The move addresses a longstanding regulatory vacuum and brings much-needed clarity to Nigeria’s growing cryptocurrency and blockchain space.
Managing Director of the NASD OTC Securities Exchange, Eguarekhide Longe, noted that with the rapid growth of digital finance and increasing youth participation in the market, the legal recognition and oversight of digital assets were overdue. He applauded the Act for strengthening fraud detection and systemic risk management within this emerging sector. “Investor protection in the digital space has become a pressing concern,” Longe said. “The ISA 2025 ensures that these new instruments operate within a secure and transparent regulatory framework.”
Commodities trading gets a legal backbone
Beyond digital finance, ISA 2025 also establishes Nigeria’s first robust legal framework for commodities exchanges and warehouse receipt systems. This addresses a major gap in the 2007 law, which left agricultural and commodity markets largely unregulated.
Stakeholders believe that with this new provision, Nigeria is poised to become a major player in Africa’s commodity economy. According to them, regulated commodities trading will enhance price discovery, stimulate investment in agricultural production, and offer better financing options for farmers through securitised warehouse receipts.
Managing Director of the Lagos Commodities and Futures Exchange (LCFE), Akin Akeredolu-Ale, hailed the development as timely and critical. Noting that the capital market serves as the barometer of the economy, Akeredolu-Ale said, “An enabling environment, particularly the legal framework, forms the bedrock for growth of the capital market and, overall, the economy—especially in sectors like agriculture, where we have a comparative advantage.”
Structural reforms and regulatory clarity
Another key structural reform introduced is the classification of securities exchanges into Composite and Non-Composite Exchanges. While Composite Exchanges can list and trade all types of securities, Non-Composite Exchanges are restricted to specific asset classes. This classification enables more focused market operations and caters to the diverse needs of investors and issuers.
The Act also mandates the use of Legal Entity Identifiers (LEIs) for capital market transactions. LEIs will help track transactions more effectively, reduce fraud, and improve market surveillance.
The legislation further expands the types of issuers that can access the capital market and introduces new financial instruments—subject to SEC approval—that could deepen the market and increase its global competitiveness.
According to the SEC’s Director General, Emomotimi Agama, the new legislation is a strategic alignment with the standards of the International Organisation of Securities Commissions (IOSCO). This alignment helps Nigeria retain its “Signatory A” status under IOSCO’s Enhanced Multilateral Memorandum of Understanding (EMMoU), which is vital for attracting global institutional investors.
Strengthening the role of subnational governments
The Act expands the access of subnational governments to capital market financing. Previously, state and local governments were heavily reliant on federal allocations or traditional bank loans to fund infrastructure projects. With the new law, these entities can now issue securities directly in the capital market to finance projects in transportation, healthcare, education, and housing.
Market analysts view this as a major step toward decentralising development financing and fostering fiscal independence at the subnational level. It also opens a new frontier for investors seeking fixed-income opportunities with long-term social impact.
Challenges and opportunities ahead
While the ISA 2025 has been met with widespread approval, its success will depend on effective implementation. The SEC faces the challenge of building capacity to regulate the fast-evolving digital asset space and ensuring that its enforcement mechanisms are robust enough to deter fraudulent activities. Additionally, educating investors about the new opportunities and protections under the Act will be critical to maximising its impact.
SEC’s DG, Agama, however, has assured that the Commission has set up an implementation team “to deal with every page of the ISA 2025, making sure that we achieve the goal of the new law, and making sure that investors are confident and happy again to be part of the market—bringing succour to them when it is needed, and providing an opportunity for us to democratise wealth creation in this country.”
Key differences between ISA 2025 and ISA 2007
The Investments and Securities Act 2025 represents a major shift from the ISA 2007, moving beyond incremental reform to provide a complete restructuring of the capital market’s legal foundation. It introduces the formal recognition of digital assets as securities, thereby bringing them under SEC regulation—a significant advancement given the unregulated nature of this space under the previous law. The mandatory use of Legal Entity Identifiers (LEIs) also sets a new standard for transparency and traceability in market transactions.
Further distinguishing the new Act is the classification of exchanges into Composite and Non-Composite types, a reform aimed at enhancing market efficiency and investor engagement. Investor protection measures have also been upgraded, with the enhanced Investor Protection Fund offering broader coverage.
Additionally, ISA 2025 empowers subnational governments to directly access market-based financing, expanding the pool of issuers and investment opportunities. These reforms mark a clear departure from the older framework, positioning Nigeria’s capital market for inclusive and sustainable growth.