Introduction
On 25th March 2025, the President of the Federal Republic of Nigeria signed into law the Investment and Securities Act, 2025 (ISA 2025), thereby repealing the long-standing Investment and Securities Act, 2007. The ISA 2025 marks a watershed moment in the regulation of Nigeria’s capital market, introducing a comprehensive and innovation-driven regulatory framework that reflects global best practices. It reflects Nigeria’s commitment to adapting to the digital economy, enhancing investor protection, and reinforcing the integrity of its capital market.
This Newsletter highlights key changes in the ISA 2025, focusing particularly on the newly introduced regulation of Virtual Asset Service Providers (VASPs), digital asset exchanges, commodity and warehouse receipts, forex and online trading platforms, and financial market infrastructure.
Key Provisions
The Expansive Role of the Securities and Exchange Commission (SEC)
Section 3(1) of the ISA 2025 reaffirms the SEC as the apex regulator of Nigeria’s capital market and significantly broadens its mandate. Under Section 3(2), the SEC’s objectives now include protecting investors and ensuring fair, efficient, and transparent markets; preventing insider trading, market abuse, and fraud; and promoting financial stability and capital formation.
The scope of the SEC’s regulatory oversight has also been materially broadened. In addition to the traditional capital market operators, the SEC is now empowered to regulate a diverse array of market participants and institutions[1], including securities and commodities exchanges, virtual and digital asset platforms, online forex trading activities, and warehouse receipt platforms.
Importantly, Section 3(4) of the ISA 2025 grants the SEC enforcement powers, including the authority to intervene in the management of failing or mismanaged regulated entities; appoint independent directors to public companies; freeze assets under investigation[2]; domesticate private keys and establish a “National Confiscation Wallet” for illegal digital asset operations.[3]
Regulation of Virtual Assets and Fintech Operators
The ISA 2025 formally integrates the digital assets within Nigeria’s capital market regulatory framework. Under Section 3(3)(i), the SEC is authorized to register and regulate VASPs, including crypto exchanges, digital wallets, and online forex platforms; custodians of digital securities and tokenized assets; and cross-border digital transactions.[4]
The SEC is also empowered to oversee infrastructure providers involved in cross-border digital asset transactions. A notable innovation under the ISA 2025 is the express authority to establish a confiscation wallet, ensure private key control, and obtain digital communication records from internet service providers during investigations.[5]
This inclusion in the ISA finally resolves the constant uncertainty regarding the regulation of VASPs and digital assets in Nigeria, while also settling the jurisdictional debate between the SEC and the Central Bank of Nigeria regarding the regulation of VASPs and digital assets in Nigeria.
Regulation of Commodities Exchanges & Warehouse Receipts
The ISA 2025 establishes a comprehensive legal framework for commodities exchanges. Under Part XV, any entity seeking to establish or operate an exchange or act as a commodity broker must register with the SEC and comply with detailed governance, record-keeping, and risk-management standards. Unlicensed activity attracts heavy civil and criminal sanctions.[6] Additionally, where systemic risks are identified, the SEC is empowered to suspend trading or revoke an operator’s license[7].
Furthermore, and in a significant regulatory move to establish a clear regulatory framework applicable to warehouse receipts, the ISA 2025 now recognizes warehouse receipts as both documents of title and qualified securities.[8] These receipts may now be issued electronically, are negotiable, and can be used as collateral, unlocking access to working capital for farmers, aggregators, and traders. Each receipt must conform to a standardized SEC format, specifying the type, quality, and quantity of the stored commodity, and it is freely transferable.[9]
Section 240 of the ISA 2025 imposes detailed duties on warehouse operators and collateral managers, including mandatory registration, maintenance of issuance on stored goods, submission to SEC inspections, and the appointment of an SEC-licensed collateral management company. Operators also owe strict obligations to deliver commodities to holders of valid receipts and are entitled to only a narrowly defined statutory lien.[10]
Through its expanded oversight[11] and emergency intervention authority[12], the SEC is positioned to foster transparency, mitigate counterparty risk, and enhance price discovery across Nigeria’s agricultural and mineral value chains. In essence, the ISA 2025 lays the groundwork to deepen liquidity, broaden participation, and integrate the country’s commodity markets with global trading standards.
Forex & Online Trading Platforms
The ISA 2025 extends SEC oversight to online foreign exchange (forex) trading platforms, bringing these entities within the SEC’s regulatory purview under Section 3(3)(b). These platforms must now comply with robust requirements, including disclosure obligations, capital adequacy, AML controls, and ongoing respondent reporting.[13] This regulatory approach mirrors the SEC’s supervision of digital and commodity exchanges, thus ensuring forex platforms operate with transparency and adherence to capital market norms.
Before the ISA 2025, online forex activities existed in a regulatory grey area as forex trading platforms could operate in Nigeria without obtaining any license (from any regulator). The ISA 2025 delivers clarity by explicitly capturing forex platforms as securities market participants; although the law is silent on the definition of “online forex activities,” and it is arguable that this might be a deliberate attempt by the regulator to keep its oversight powers broad on the industry. It remains to be seen whether the SEC will issue additional regulations applicable to forex trading activities.
Issuance of Debt Securities
Under Section 308, no local or foreign company, supranational organization, or other approved entity may offer bonds, notes, or other debt instruments to the public without prior SEC approval. The SEC is empowered to issue detailed rules governing issuer eligibility, permissible offer structures, minimum credit rating standards, disclosure and continuing reporting templates, application fees, and the minimum trust deed or similar instrument.[14] This provision gives the SEC room to recalibrate requirements as market conditions evolve.
Additionally, any issuer that is more than 30 days in arrears on interest or principal from an earlier bond issue is disqualified from floating a new debt security until the default is remedied[15]. This measure aims to protect investors and prevent habitual defaulters from re-entering the market unchecked.
The blanket regulation of issuance of debt securities is also a significant regulatory statement by the SEC, as it now brings under its regulatory purview the regulation of issuance of debt securities to the public, and it is expected that the SEC will issue additional regulations as relevant.
Free Trade Zones
The ISA 2025 formally includes certain activities conducted in free trade zones (FTZs) within the scope of the SEC oversight. Section 95 mandates that all capital market activities conducted within FTZs must receive SEC approval. Once approved, entities operating in these zones become subject to applicable Nigerian tax laws and capital market regulations.[16] This provision ensures that operations within FTZs do not bypass national oversight and aligns FTZ capital raising with broader market integrity objectives.
Investor Protection Reforms
In a bid to further safeguard retail and institutional investors, the ISA 2025 mandates the establishment of a statutory Investor Protection Fund by securities exchanges.[17] These funds are designed to compensate investors for losses arising from insolvency, fraud, negligence by capital market operators, as well as losses occasioned by license revocation or unclaimed dividends and the winding up of public companies.[18]
The Investor Protection Fund is to be managed by a board of trustees[19] and must be kept in a dedicated account. The SEC is empowered to issue regulations governing its administration and to adjudicate claims brought under the fund.
Regulation of Financial Market Infrastructure (FMI)
The ISA 2025 introduces a comprehensive legal framework for the regulation of Financial Market Infrastructure (FMI), including securities and commodities exchanges, central counterparties, securities depositories, and other market settlement systems.
The ISA 2025 recognizes composite, mono-product, and alternative trading systems. All such platforms must be incorporated in Nigeria and satisfy regulatory requirements relating to capitalization, governance, and fitness and propriety of key personnel.[20] Operating an FMI without registration constitutes a criminal offence under Section 41 of the ISA 2025 and attracts penalties ranging from immediate closure to fines equal to the statutory paid-up capital for the relevant FMI category, or imprisonment for up to five years.
Section 43 empowers the SEC to revoke approvals or suspend FMI operations if deemed necessary in the public interest or to protect investors. Every FMI is under a statutory obligation to submit its operating rules[21], including those relating to default management, margining, haircut policies, and loss allocation for prior SEC approval. No rule change is effective until cleared by the SEC.[22]
In terms of insolvency, Sections 45 and 46 provide that market contracts, collateral arrangements, and default fund contributions governed by FMI rules are insulated from ordinary insolvency law. These provisions ensure that such contracts cannot be invalidated, stayed, or avoided by a liquidator, receiver, or bankruptcy court. Once an FMI certifies the net amount owed by it to a defaulting participant, that amount is conclusive and binding for winding-up purposes. Custodians and banks holding a defaulter’s assets are obligated to cooperate with the FMI to ensure default resolution[23].
To align with international standards, Section 54 prevents Nigerian courts or insolvency office-holders from staying or unwinding settlement actions taken under FMI rules. This finality is preserved even in cross-border insolvency scenarios, ensuring continued eligibility of Nigerian infrastructures for international recognition and linkages.
Corporate Control, Market Conduct and Enforcement
The ISA 2025 strengthens regulatory oversight of public companies by requiring prior SEC approval, submission of compliant offer documentation, and proof of funding before such transactions can proceed.[24]
Market conduct provisions have been comprehensively updated to address modern threats. The ISA 2025 includes revised provisions on false trading, rumor-mongering, insider dealing, false statements, and short-swing profit disgorgement.[25] To encourage whistleblowing, the SEC is authorized to reward informants with a share of any recovered penalties or assets.
Conclusion
The ISA 2025 represents a transformative legal milestone and a deliberate attempt to future-proof Nigeria’s capital markets. By introducing structured frameworks for digital assets, virtual service providers, and alternative capital vehicles, the ISA 205 signifies a progressive pivot toward a capital market that is dynamic, resilient, and globally integrated.
For capital market operators, technology platforms, and fund managers, compliance with the ISA 2025 is not optional. The SEC has been empowered with broader tools than ever to enforce the law in the interest of investor protection and market integrity.
For further clarification or assistance regarding compliance with the ISA 205 or any related legal matters, you can contact us via email – lawyers@credence-law.com
[1] Section 3(3) of the ISA 2025
[2] Section 3(4)(k) of the ISA 2025
[3] Section 3(4)(n)
[4] Section 3(3) of the ISA 2025
[5] Section 3(4) of the ISA 2025
[6] Section 224 of the ISA 2025
[7] Section 234 of the ISA 2025
[8] Section 240 of the ISA 2025
[9] Section 247 of the ISA 2025
[10] Section 252 of the ISA 2025
[11] Section 232 of the ISA 2025
[12] Section 237 of the ISA 2025
[13] Part VI of the ISA 2025
[14] Section 308(2) of the ISA 2025
[15] Section 308(3) of the ISA 2025
[16] Section 95(f) of the ISA 2025
[17] Sections 198-223 of the ISA 2025
[18] Id.
[19] Section 200 of the ISA 2025
[20] Section 26 of the ISA 2025
[21] Section 44 of the ISA 2025
[22] Section 41 of the ISA 2025
[23] Section 51 of the ISA 2025
[24] Sections 140-149 of the ISA 2025
[25] Sections 121-139 of the ISA 2025