SEC requires complete registration of market instruments in significant enforcement effort since 2007

The Securities and Exchange Commission (SEC) recently embarked on a significant oversight initiative, instructing all capital market operators to divulge their compliance status. They must ensure that every tradable instrument under their management is completely registered with the capital market regulator by January 2026. This move signifies the first major enforcement action under the country’s newly enacted Investments and Securities Act 2025 (ISA 2025). It represents a shift towards a more intrusive regulatory regime based on rules aimed at addressing the fragmentation, opacity, and self-regulation that have characterized sectors of Nigeria’s capital markets for an extended period.

The SEC Director-General, Emomotimi Agama, emphasized that the new directive goes beyond mere administrative housekeeping. It is a crucial assessment of the market’s preparedness to operate under a modernized securities framework. Speaking at the SEC Journalists Academy on “The ISA 2025 and the Future of Nigeria’s Capital Market: Innovation, Protection, and Growth,” Agama, represented by Bola Ajomale, the commissioner of operations, stressed that operators are required to report their compliance status and complete the registration of all instruments before the January deadline.

According to Agama, anyone offering a tradable instrument must register with the Commission. Success in this endeavor will lay the groundwork for a deep, efficient, and globally competitive capital market that Nigeria rightfully deserves. Although the ISA 2025 has garnered widespread acceptance among issuers, fintech founders, and institutional investors, the compliance directive poses a challenge for numerous operators whose instruments have long operated in regulatory gray areas.

Over the years, the regulator grappled with trying to curb fast-paced innovation, particularly within a market where digital asset promoters, unregulated fund managers, and fringe investment platforms thrived by exploiting gaps in the 2007 Act. Some of these platforms collapsed, causing retail investors significant losses and eroding public trust. The new Act aims to reverse this trend by granting the SEC explicit powers to act in the public interest, enforce market-wide compliance duties, and investigate any violations, including those by unrelated third parties, to combat market abuse, insider trading networks, and fraudulent schemes.

Agama highlighted that expanding investigative authority is one of the most impactful changes in the ISA 2025, as previous enforcement endeavors were often hindered by narrow legal definitions and outdated supervisory boundaries. The advent of digital trading, encompassing app-based retail investing and tokenized assets, is central to the reformation. By conforming to IOSCO standards, the ISA 2025 seeks to align Nigeria’s regulatory infrastructure with the expectations of global institutional investors.

With Nigeria serving as the headquarters for eight African unicorns and hosting over 40 fintech firms operating within regulatory sandboxes, the existing framework designed for an analog financial system has become inadequate. The new law endeavors to address this gap by elucidating the SEC’s objectives, enhancing its authority, and prioritizing investor protection. It eliminates ambiguities that previously complicated enforcement actions and ensures better synchronization with national economic objectives, particularly those related to financial stability and capital formation.