To protect investors, eliminate fraudulent dealings and enhance the general operations of the Securities and Exchange Commission and the Nigerian capital market, the Senate on Wednesday passed the Investments and Securities (ISB) Bill 2024.
The Bill repeals the Securities and Exchange Commission (SEC) Act. .
During the consideration of the report on the Bill from the committee on Capital Market, Senate Chief Whip, Tahir Monguno, said the new law would provide for an innovative regulatory framework to boost investors’ confidence.
Chairman of the Senate Committee on Capital Market, Senator Osita Izunaso, said the Bill was capable of transforming the capital market, encourage the influx of foreign investors as well as boost investors’ confidence, among others.
“The Bill seeks to repeal the existing Investments and Securities Act 2007, and to establish a new market infrastructure and wide-ranging system of regulation of investments and securities businesses in Nigeria, especially in the areas of derivatives, systematic risk management, financial market infrastructure and Ponzi scheme and platforms,” Izunaso said.
“It was meant to establish the Securities and Exchange Commission as the apex regulatory authority for the Nigerian Capital Market. It will be a regulation of the Market to ensure capital formation, the protection of investors, maintenance of fair, efficient and transparent market, and reduction of systemic risk.” he added.
Izunaso further said the main objective of the Bill was to enact legislation that aligned with global dynamics as they relate to the regulation of capital market through the provision of an innovative regulatory framework.
“It will protect the integrity of the security market against all forms of market abuse and insider dealing. It will prevent unauthorised, illegal, unlawful, fraudulent and unfair trade practices, relating to securities and investments.”
The lawmaker said the overriding purpose of the proposed legislation was to strengthen the capacity of the regulatory Commission for the effective performance of its statutory mandate as well as reposition that vital sector of the economy for national economic transformation.
In declaring the Bill passed, the Senate President, Godswill Akpabio, said a lot of people would be happy to infuse funds into the capital market when they know a lot of the risks have been minimised.
Director General of the SEC, Dr. Emomotimi Agama said recently that the Commission was pushing for harsher penalties on Ponzi scheme operators through the proposed ISB 2024 Bill, which would mandate a minimum fine of N20 million, or up to 10 years imprisonment term, or both for offenders.
Agama explained that the Bill would explicitly prohibit Ponzi and other pyramid schemes, fortifying protections for investors against illegal fund managers, to shield Nigerian investors from fraudulent schemes and enhance to the capital market’s global competitiveness.
A notable amendment in the Bill would allow the Investor Protection Fund (IPF), established by securities exchanges, to cover investor losses linked to the deregistration of brokerage firms, extending beyond the current coverage of bankruptcy or negligence cases.
Agama also noted the need for updates to the existing ISB 2007 to reduce ambiguities and align Nigeria’s capital market regulations with international standards.
“This Bill’s passage would be pivotal in setting Nigeria on the path to a world-class capital market,” he stated, underscoring the role of a robust capital market in economic diversification.
The ISB 2024 also introduces regulatory frameworks for Commodity Exchanges and Warehouse Receipts, essential steps for developing Nigeria’s commodities sector.
