Nigeria: Investments and Securities Bill Passes Second Reading in Senate

The Investments and Securities Bill (ISB) 2024 has successfully passed its second reading in the Nigerian Senate, marking a significant step toward strengthening regulations and operations in Nigeria’s capital market. The bill aims to repeal the existing Securities and Exchange Commission (SEC) Act and introduce a modernized regulatory framework.

Enhanced Protections and Market Integrity

During the session, Senate Chief Whip Tahir Monguno emphasized that the bill is designed to protect investors and eliminate fraudulent activities in the capital market. Similarly, Senator Osita Izunaso, Chairman of the Senate Committee on Capital Market, highlighted the transformative potential of the bill, noting that it aims to:

• Foster investor confidence.
• Encourage the influx of foreign investments.
• Align Nigeria’s capital market regulations with global standards.

Izunaso stated, “The bill will protect the integrity of the securities market against all forms of market abuse and insider trading. It will also prevent unauthorized, illegal, fraudulent, and unfair trade practices related to securities and investments.”

Bipartisan Support

The bill has garnered broad support from Senators, including Isa Jibrin (APC-Kogi) and Adetokunbo Abiru (APC-Lagos). Senator Jibrin pointed out the need for clear mandates for the SEC to ensure the capital market functions effectively, saying, “This amendment is essential to enable the SEC to perform its role in line with global best practices.”

Senate President Godswill Akpabio expressed optimism about the bill’s impact, stating that reducing market risks would encourage more Nigerians and international investors to inject funds into the capital market. He subsequently referred the bill to the Senate Committee on Capital Market for further legislative review.

Stronger Measures Against Fraud

In addition to enhancing investor protections, the ISB 2024 introduces harsher penalties for operators of Ponzi and pyramid schemes. According to the SEC Director General, Dr. Emomotimi Agama, the proposed law mandates a minimum fine of ₦20 million or up to 10 years imprisonment, or both, for those found guilty of operating such schemes. Agama noted, “The bill explicitly prohibits Ponzi and pyramid schemes, fortifying protections for investors and boosting the global competitiveness of Nigeria’s capital market.”

Expanded Investor Protections

A significant amendment in the bill expands the role of the Investor Protection Fund (IPF). Currently limited to compensating investors for losses due to brokerage firm bankruptcy or negligence, the revised framework allows the IPF to cover losses arising from the deregistration of brokerage firms.

Looking Ahead

With the bill advancing through legislative stages, it sets the stage for a robust capital market framework aimed at fostering transparency, attracting investments, and shielding investors from fraudulent practices. The Senate Committee on Capital Market is expected to refine the bill further, paving the way for its eventual passage into law.

The ISB 2024 signals a renewed commitment by Nigeria’s lawmakers to ensure a resilient and investor-friendly capital market ecosystem.