The Investment and Securities Act is the main law in Nigeria regulating investments and the capital market. Its goals are to protect investors, ensure fair and efficient markets, and build trust in the financial system.
Essentially, the ISA sets the rules for public offers of securities, mutual funds, mergers and acquisitions of public companies, and other parts of the capital market.
Recently, the President signed a new version of the Act into law. This new Act replaces the Investment Securities Act of 2007. Since 2007, the Nigerian capital market has experienced significant changes and progress. As a result, the ISA was updated to reflect these changes over the years.
See a summary of the ISA 2025 here.
In March 2025, President Bola Tinubu signed the landmark Investments and Securities Act (ISA) into law, replacing the previous ISA of 2007. This is the first major update to Nigeria’s investment laws in nearly two decades – and it comes at a time when the investing landscape has changed dramatically. From the rise of fintech and digital assets to a greater focus on investor protection, the new Act addresses many modern realities that the 2007 law couldn’t cover.
Why does this new Act matter now? Nigeria’s capital market is on a growth path, and having up-to-date rules boosts confidence for everyone involved. The government is keen to strengthen investor trust, crack down on fraud, and align our market with global standards. Big topics like cryptocurrency, foreign investment, and market transparency are front and centre in this law.
So why is this important to our customers? As a trusted wealth management platform, we believe in empowering you with information that affects your financial journey. When there’s a major change in the investing environment, we want you – our customers – to understand what’s happening and why it’s important.
In this article, we’ll break down the newly signed ISA and explain what it means for Nigeria’s capital market and you as a retail investor.
Overview of the Act
The Investments and Securities Act 2025 (ISA 2025) is a comprehensive overhaul of Nigeria’s capital market laws, replacing the previous ISA of 2007. Here’s a rundown of the key changes and provisions in the new Act:
▪︎ Empowered Market Regulator: The Securities and Exchange Commission (SEC) now has greater authority to oversee and regulate the market. The Act reaffirms the SEC as the apex regulator and bolsters its powers to ensure a fair, transparent market and to reduce systemic risks. Essentially, the SEC can enforce the rules more effectively to protect investors and maintain market integrity.
The Securities and Exchange Commission of Nigeria is the foremost Governmental agency mandated to regulate the investment market, to protect investors, and ensure a fair and efficient capital market.
▪︎ Crackdown on Unlawful Schemes: Ponzi schemes and other fraudulent investment schemes are expressly banned by the new law. The Act does not just outlaw these scams – it also prescribes tough penalties, including hefty jail terms for anyone promoting or operating such schemes.
This is a strong message that swindlers will no longer get a free pass in our investment space.
▪︎ Recognition of Digital Assets: For the first time, Nigeria legally recognizes virtual/digital assets (like cryptocurrencies) as securities. In other words, crypto assets and platforms are now under SEC’s regulatory purview. Exchanges or companies dealing in digital assets must register and follow SEC rules just like stockbrokers or other finance companies.
This change brings clarity to the status of cryptocurrencies – an area that was previously in a legal gray zone.
▪︎ Legal Entity Identifier (LEI) Requirement: The Act introduces a requirement for using Legal Entity Identifiers (LEIs) in the capital market. Every market participant – like companies issuing securities or major investors – will need an LEI for their transactions. (Think of an LEI as a global ID card for financial entities.)
Using LEIs helps regulators trace and verify transactions more easily across the globe, boosting transparency in our market.
▪︎ Strengthening Market Infrastructure and Oversight: The law also modernises how our markets operate. It classifies types of stock exchanges, provides a framework to regulate critical market infrastructure (like clearing houses and trade repositories), and even makes it easier for state governments to raise funds through the capital market.
Additionally, the Act beefs up the Investments and Securities Tribunal – the special court for capital market disputes – so it can resolve issues faster and uphold investor rights more effectively.
▪︎ Greater Responsibilities for Trade Associations: The Act expressly imposes a higher responsibility on trade associations, which in particular is to “act in the public interest to ensure the integrity of the market and the protection of investors.” As Cowrywise is a member of the Fund Managers Association of Nigeria (FMAN), this added responsibility aligns with the Company’s commitment to investor protection and continuous safeguarding the interests of its customers.
The ISA has been described as a transformative step to enhance investor protection, and improve market transparency. Will this make any real difference?
What Does It Mean for Nigeria’s Capital Market?
The new ISA has real implications for how Nigeria’s capital market functions and its reputation globally.
1. A Stronger, More Confident Market: By expanding the SEC’s powers and enforcement tools, the Act makes regulation in Nigeria closer to what you’d find in advanced markets. The Securities and Exchange Commission can act more decisively to enforce rules, which means greater oversight of market players. This strength aligns Nigeria with international best practices.
For investors, a stronger regulator translates to a safer market – one where rules are enforced and bad actors are kept in check. Over time, this builds confidence among both local and foreign investors, as they see Nigeria taking investor protection seriously. In fact, officials say the new law will help reposition Nigeria as a competitive destination for investment, both from within the country and abroad.
2. Embracing Innovation (with Safeguards): The explicit recognition of digital assets (like crypto) as part of the regulated market is a game-changer. It means Nigeria is embracing financial innovation instead of shying away from it – but doing so in a way that manages risk. Bringing cryptocurrency and other virtual assets into the regulatory fold provides oversight for this booming sector.
This move could spur growth in fintech and digital finance, as legitimate crypto businesses can operate with clearer guidelines. At the same time, it protects investors by ensuring that if you dabble in crypto, you’re not in an unsafe territory – there are rules and watchdogs in place. Additionally, by opening the door to alternative investments (like commodities and even allowing state governments to issue bonds more flexibly), the Act could broaden the market’s offerings. A broader market with innovative products can attract more participation, fueling overall market growth.
3. Better Protection for Investors: Investor protection is at the heart of the new Act. The law’s stance on Ponzi schemes and illegal investments is a bold step to clean up the market. We’ve all heard stories of Nigerians losing money to “too good to be true” schemes; now, there’s a clear legal framework to shut those down and punish the culprits. This will likely deter fraudsters and, importantly, give the average investor more peace of mind. Moreover, the improvements to market infrastructure and the tribunal mean that if something does go wrong, the system is better equipped to handle it.
Disputes can be resolved more efficiently and transparently, and mechanisms are in place to prevent systemic crises (for example, by insulating the trading infrastructure from general bankruptcy issues). All these measures add up to a safer investing environment, where your rights are better protected.
4. Alignment with Global Standards: The ISA 2025 consciously aligns Nigeria’s capital market with global standards and best practices. From adopting tools like the LEI for transparency to meeting international regulatory benchmarks, Nigeria is sending a message that our market is “open for business” and trustworthy on the world stage. This alignment not only attracts foreign investment but also means Nigerian investors benefit from a market that functions as well as those in more developed economies. It’s about leveling up the playing field.
When markets follow global norms, it becomes easier for foreign investors to participate and for local investors to connect with opportunities abroad, because everyone speaks the same “regulatory language.” In the long run, this can lead to deeper liquidity and more stability in the market, which benefits all participants.
Implications for Retail Investors
Okay, so the law is a big deal for the market – but what does it mean for you as a customer using Cowrywise? Here’s how the newly minted ISA 2025 affects and protects everyday investors on our platform:
▪︎ Greater Safety for Your Investments: The stronger enforcement against fraud and scams directly benefits you. With Ponzi schemes explicitly outlawed and punishable under this Act, there’s a higher level of scrutiny on any investment offering in Nigeria. This means that the overall environment in which you’re investing is more secure.
We’ve always vetted the investment opportunities on Cowrywise carefully, but knowing there’s a legal hammer to drop on illicit schemes should give you extra peace of mind.
▪︎ Clarity and Confidence in New Asset Classes: Many investors are curious about assets like cryptocurrency and other digital investments. The new Act provides clear rules for these virtual asset services. What this means for you is more clarity and less confusion. If you decide to invest in digital assets (now or in the future), you’ll be doing so in a space that the SEC is actively supervising. This added oversight can increase your trust in trying out these new opportunities because the operators (exchanges, brokers, etc.) must play by the rules or face consequences.
While Cowrywise currently focuses on products like mutual funds and other traditional assets, we welcome the fact that the crypto space in Nigeria will no longer be an unregulated Wild West. When regulations catch up with innovation, it often paves the way for safe innovation – so down the line, you might see more digital asset offerings that meet the high standards we and the regulators expect.
▪︎ Transparency and Global Trust: The introduction of the Legal Entity Identifier (LEI) and other global best practices might sound technical, but they have real benefits for you. Greater transparency in the market means it’s harder for bad actors to hide. Every major player in a transaction can be identified, which helps regulators (and even the platforms like us) spot red flags early. For you, the investor, this creates a more trustworthy environment. You might not see an LEI in action, but you will feel its effects in the form of a market where information is more open and reliable.
Also, as Nigeria’s market aligns with global standards, it could attract more foreign investment and partnerships. Imagine more international companies or investment products becoming available here – that could mean more options for diversification in your portfolio. And if you ever want to invest beyond Nigeria, a well-regulated home market makes that process smoother too.
▪︎ Cowrywise’s Commitment to You: At Cowrywise, we have always operated with strict adherence to regulation and a focus on your security. We see the ISA 2025 as a welcome development that reinforces the values we already uphold. Our team is already studying the Act in detail to ensure we comply with all new provisions and to take advantage of any new opportunities it creates for our users.
For instance, if the Act enables new types of investment products or funds to emerge, we’ll explore bringing those to you in a responsible way. Most importantly, you can rest easy knowing that the products and services you access through Cowrywise are under an even stronger regulatory umbrella now. The new law is essentially on your side as an investor – it gives us, as an operator, clearer guidelines to protect your interests and it gives you more avenues for redress (like the improved tribunal) if any issues ever arise.
Summary
1. Strengthened Powers of the Securities and Exchange Commission (SEC)
The SEC gains broader authority to investigate and enforce compliance, including the power to impose significant fines and sanctions on violators without lengthy court processes.
For example:
- The Commission now has a clear mandate to regulate the derivatives market
- The Commission’s authority as the apex regulator of the Commodities ecosystem has become further solidified
- Mergers and Acquisitions involving public companies must first get the Commission’s approval (previously, the Federal Competition and Consumer Protection Council Act was the lead regulator whose approval was required).
- The Commission now has the power to appoint Independent Non-Executive Directors to the Boards of public companies in which it has intervened or taken regulatory action.
- The Commission now has the power to place directors of public companies on probation for a period considered reasonable by the Commission.
- No entity can operate a securities exchange unless it has the Commission’s approval. New guidelines for operating a securities exchange were also clarified.
2. Regulation and Registration of Securities
The definition of securities was expanded to include ‘virtual assets’ (i.e., crypto and other related services). Platforms offering these services must register and adhere to SEC rules.
Also, an entity that wants to sell or offer shares (or similar financial products) of a Nigerian public company outside Nigeria or list shares on a foreign stock exchange must first get approval from the SEC. You can not take a Nigerian public company’s shares to sell or trade abroad without first informing and getting permission from the authorities in Nigeria.
3. Unclaimed Dividends
The Act reaffirms that unclaimed dividends must be remitted to an Unclaimed Dividend Trust Fund (managed under SEC supervision). It is against the law for anyone to deal with unclaimed dividends in a way that goes against what is prescribed. The penalty for contravening the law on how to treat unclaimed dividends will attract a direct N10mm fine plus N50k for each day the violation continues (instead of going to court).
4. Stiffer Penalties for Offenders
Insider trading, market manipulation, and running unapproved investment schemes (re: Ponzi schemes, foreign investment schemes, and other unregulated crowdfunding activities) now attract heavier fines and longer prison terms.
5. Foreign Collective Investment Schemes
Foreign collective investment schemes targeting Nigerian investors must register with the SEC or risk heavy penalties.
6. Expanded Scope of the Investor Protection Fund
Securities exchanges are expected to establish and maintain a fund known as the Investor Protector Fund (IPF). An IPF is meant to compensate investors who lose money when:
- A securities exchange dealing member firm becomes insolvent or bankrupt or acts negligently.
- That firm or any of its directors/employees commits fraud or wrongdoing (for instance, stealing or misusing investors’ money or assets).
- The firm’s registration (re: license) is revoked or cancelled (a new provision)
Final word
Overall, the recently enacted ISA seeks to:
1. Give the SEC more power to regulate effectively. Now, the SEC can take action directly without needing court decisions for some situations.
2. Protect retail investors better by introducing stronger safeguards against fraud and providing more ways to seek compensation if they’re harmed. Stricter disclosure rules and heavier penalties for law violations will enhance investor protection.
3. Ensure that corporate issuers and fund managers follow improved reporting and registration processes, especially for new financial products, including foreign instruments.
4. Digital and fintech companies must follow governance rules and maintain transparency in their operations.
5. Provide clear guidelines for operating or listing securities in Nigeria. Foreign investors and operators must get approvals from the SEC before offering products to the public.
For years, Cowrywise has operated under a license by the SEC, and corporate frameworks set by the commission to safeguard your funds. Now, with the ISA 2025, the SEC is even more empowered to protect the integrity of the capital market. By extension, it means your funds are even more secure with us.
At Cowrywise, we have one mission – to democratize access to investment products to individuals from all works of life. Over the years, we have built investment products to fit any lifestyle, making investing as easy as sending a tweet, and ensuring that you can invest safely and securely no matter who you are.
Here are 9 ways you can build wealth on Cowrywise – all at attractive rates.
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No matter who you are, there is an investment product for you. It’s time to put your money to work.
Happy Investing!