Nigeria’s Senate has taken a significant step toward transforming the country’s capital market by advancing the Investments and Securities Bill (ISB) 2024 to its second reading. The bill aims to repeal the current Securities and Exchange Commission (SEC) Act and introduce a more robust legal framework to regulate the market, protect investors, and attract foreign investment.
Key Provisions and Objectives
The primary goals of the ISB 2024 are to:
- Strengthen Investor Protections: The bill seeks to safeguard investors by combating fraudulent activities, insider trading, and market abuse.
- Boost Market Confidence: By aligning with global best practices, the bill aims to enhance investor confidence and encourage foreign investments.
- Broaden Regulatory Scope: It introduces a more innovative regulatory framework to cover emerging market dynamics.
Debate Highlights
Leading the debate, Senator Osita Izunaso, Chairman of the Senate Committee on Capital Market, emphasized the bill’s potential to transform Nigeria’s financial landscape:
“It will protect the integrity of the security market against all forms of market abuse and insider dealing. It will prevent unauthorized, illegal, unlawful, fraudulent, and unfair trade practices relating to securities and investments.”
Senator Isa Jibrin and Senator Adetokunbo Abiru also expressed strong support, underscoring the bill’s importance in clarifying the SEC’s regulatory role and ensuring the market operates efficiently.
Senate President Godswill Akpabio highlighted the potential impact on investor confidence, noting that minimizing risks would encourage more people to invest in Nigeria’s capital market.
Crackdown on Ponzi Schemes
A notable aspect of the ISB 2024 is its crackdown on Ponzi and pyramid schemes. Dr. Emomotimi Agama, Director General of the SEC, outlined stricter penalties for operators of such schemes, including:
- A minimum fine of ₦20 million.
- Prison terms of up to 10 years.
- The possibility of both penalties being applied concurrently.
These measures aim to protect Nigerians from fraudulent investment schemes and promote a safer investment environment.
Investor Protection Fund Expansion
Another critical amendment in the bill involves expanding the Investor Protection Fund (IPF). Currently, the fund only compensates investors for losses due to brokerage firm bankruptcy or negligence. The new bill proposes covering losses related to the deregistration of brokerage firms, further enhancing investor security.
Next Steps
The bill has been referred to the Senate Committee on Capital Market for further review and legislative action. Once enacted, it is expected to:
- Improve regulatory oversight.
- Encourage innovation in financial services.
- Attract both local and international investments.
The Investments and Securities Bill 2024 represents a significant milestone for Nigeria’s financial sector, aiming to align the capital market with global standards and boost investor confidence. By addressing fraud and enhancing protections, the bill positions Nigeria’s capital market for sustainable growth and increased foreign investment.
