BUSINESS DAY NG
The Nigerian capital market is a subsector of the Nigerian financial market and a major driver of economic growth and development. It is principally a market for long-term investments, where equities and debt securities are issued and traded. The Capital Market also fosters economic growth and investment opportunities in Nigeria through these economic activities.
The Capital Market is regulated by both the Nigeria Exchange Group (NGX) especially where the activities concern a public company and the Securities and Exchange Commission (SEC). According to a 2023 report on the Nigerian capital market issued by Price Waters Coopers, about NGN 235 billion was raised via corporate bond issuances from January to June 2022, and this has continued at a steady rise. In June 2023, the Nigerian capital market capitalization was about N35.011 trillion on the Nigerian Stock Exchange Limited (NGX), a 5.5% increase from the 2022 stock report. Capital Market accumulation has an observed positive impact on Nigeria’s economy due to its relationship with the Gross Domestic Product (GDP).
Another crucial function of the Capital Market is its ability to serve as an investment platform where capital is raised in a regulated environment to protect investors’ funds. Therefore, there is a need for regulation and the enforcement of compliance issues for capital market activities. Hence, it is advised that all players in the market must comply with the set laws, rules, and regulations to ensure fairness, transparency, and market integrity. This article thus explores the key regulatory framework in the Nigerian capital markets and their far-reaching impact on the Nigerian financial economy.
Laws regulating Nigeria’s Capital Market
Some various laws and regulations govern and regulate the capital markets in Nigeria, the primary one being the Investment and Securities Act 2007.
i. Investment and Securities Act 2007: The Investment and Securities Act (ISA) is the major law in the Nigerian capital markets. It provides a comprehensive framework for regulating investment and securities business in Nigeria. The ISA contains; the establishment of the SEC, the registration and regulation of capital market operators, the control and regulation of initial public offerings (IPOs), and the establishment of the Investors Protection Fund, among others. The purpose of the ISA is to control the activities of persons engaged or involved in the capital markets. Additionally, the ISA also mandates the conduct of special and routine supervisory inspections and investigations of capital market operators. Furthermore, the ISA introduced the Investors Protection Fund which is a fund that is aimed at protecting subscribers against loss and damage arising from the default of issuers and their agents.
ii. Securities and Exchange Commission (SEC) Rules 2013: The Securities and Exchange Commission Rules (SEC Rules) provide general and specific rules for market participants. It covers registration of market participants, issuance and trading of securities, disclosure of information to investors, etc. Non-compliance with the SEC Rules attracts sanctions, such as suspension and revocation of operating licenses
