Nigeria Capital Markets: Highlights Of The Key Activities In 2025 And Outlook For 2026

INTRODUCTION 2025

was a year of recovery for Nigeria's economy following the ambitious reforms of the Nigerian government, and the capital market played a key role in driving that progress. We saw steady progress as the exchange rate stabilised, inflation moderated significantly, and economic dependence shifted towards the non-oil sector. These improvements, combined with major legislative and regulatory changes, supported renewed investor confidence in the Nigerian economy and steady market growth.

The key reforms that impacted Nigeria's capital markets in 2025 include the passage of the Investments and Securities Act 2025 (the "ISA 2025"), a new framework for commercial paper issuances, the transition to a T+2 settlement cycle and recapitalisation mandates imposed on banks, insurers, and pension fund administrators by their respective regulators. This review aims to highlight the most significant regulatory changes and market trends in 2025, concluding with a strategic outlook for 2026 that analyses the trends expected to shape the next phase of Nigeria's capital market growth.

REGULATORY REFORMS

1. Enactment of the Investments and Securities Act 2025

1.1. On 25^th March 2025, President Bola Ahmed Tinubu signed the ISA 2025 into law, and the Act came into effect on the same date. The enactment of the ISA 2025, which repealed the Investment and Securities Act 2007 (as amended), now serves as the principal legislation governing the Nigerian capital markets, introducing a modernised regulatory framework for activities in the market. The ISA 2025 expanded the categories of regulated products, participants and market infrastructure and strengthened the supervisory and enforcement powers of the Securities and Exchange Commission ("SEC"). Some key highlights of the ISA 2025 are as follows:

1. the ISA 2025 broadens the definition of securities to expressly include investment contracts, digital and virtual assets, and other instruments designated by the SEC from time to time¹. Please see our article on the effect of the ISA 2025 on digital and virtual assetshere.
2. expansion of the SEC's objectives to include regulation of foreign exchange trading platforms, intermediaries and activities,² among other objectives;
3. the ISA 2025 introduces a dedicated framework for the regulation of financial market infrastructures, including securities exchanges, clearing houses, central counterparties, trade depositories and settlement systems;³
4. it strengthens investor protection through expanded investigative and sanctioning powers of the SEC (such as the prohibition of Ponzi Schemes),⁴ increased administrative penalties, and reinforced the jurisdiction of the Investments and Securities Tribunal;⁵
5. provides a comprehensive framework for the regulation of commodities markets in Nigeria;⁶ and
6. codifies the existing regulatory regime previously implemented by the SEC under its rules and regulations for corporate restructurings (that is, mergers, acquisitions of assets, takeovers, spin-offs, carve-outs, and share reconstructions) involving a public company.⁷

1.2. The enactment of the ISA 2025 set the foundation for many of the regulatory initiatives that followed in 2025 and leading into 2026.

2. SEC Reforms – Market Infrastructure and Issuance Rules

2.1. Building on the ISA 2025 framework, the SEC introduced several market-shaping reforms focused on valuation standards, settlement efficiency and capital raising oversight. These include:

1. Mark-to-market valuation:
   
   In 2025, the SEC approved the gradual transition in how fixed-income securities held by collective investment schemes are valued. Instead of using the traditional amortised cost method, these instruments will now move toward mark-to-market valuation. To ease the transition, the SEC introduced a two-year phase-in period. During this time, existing fixed-income holdings may be valued using a hybrid approach, while all newly acquired fixed-income instruments must be marked to market as of the effective date of 22nd September 2025. This change aligns Nigerian valuation practices more closely with global standards for collective investments, enhances price transparency, and is expected to boost investor confidence.
   
   
2. Migration to T+2 settlement cycle for equities:
   
   The SEC also approved a major operational change for the Nigerian equities market: transitioning from a T+3 (trade date plus three days) to a T+2 (trade date plus two days) settlement cycle, effective 28th November 2025. Under the new framework, trades will settle two business days after execution instead of three. According to the SEC, shortening the settlement cycle is expected to improve market liquidity by allowing investors quicker access to their funds, reduce counterparty and settlement risk, and align the Nigerian equities market with prevailing global settlement standards.⁸ Although some market participants initially raised concerns, the transition was ultimately viewed as a positive development and is currently implemented. The market adjusted relatively quickly, and T+2 has since been regarded as a natural progression in settlement practice.
   
   
3. SEC Regulation of Debt Issuances by Private Companies:
   
   The SEC issued the Rules on the Issuance and Allotment of Private Companies' Securities on 24th April 2025, creating a comprehensive regulatory framework for debt capital raising by eligible private companies. Prior to these rules, most private companies' debt issuances primarily occurred outside the SEC's regulatory oversight. (For more details, see our separate article on the SEC Rules Here). These Rules now extend the SEC supervision powers to all exchanges and platforms and capital market operators involved in the trading, quotation, or admission of an eligible private company's debt securities.⁹ Eligible private companies are required to meet specified eligibility requirements and register any debt securities classified as public offers with the SEC.¹⁰ In addition, the Rules also introduce several ongoing obligations on eligible private company issuers. These include filing allotment reports, quarterly and annual financial reporting, use of proceeds, compliance with a prescribed code of conduct, and obtaining SEC approval for listing, where applicable.¹¹
   
   
4. SEC's Authority over the Regulation of Commercial Papers:
   
   In December 2024, the SEC issued New Rules on Issuance of Commercial Papers (the "SEC CP Rules") and amended Rule 8 of the Consolidated SEC Rules and Regulations 2013 (as amended). With these changes, which took effect on 1st July 2025, the SEC now exercises full regulatory oversight over the registration, issuance, and conduct of commercial paper ("CP") transactions in Nigeria. As a result, all CP issuers and transaction parties are now subject to the requirements of the ISA 2025 and the SEC CP Rules. Under the SEC CP Rules, all professional parties involved in CP transactions must be registered as capital market operators with the SEC. It also introduced detailed eligibility requirements for CP issuers. Eligible issuers must be duly registered companies, have been in operation for at least five years, possess three years of audited financial statements (with the most recent statement not older than nine months) and must not have defaulted on prior obligations.
   
   Issuers are also required to maintain a minimum shareholders' fund of ₦500 million and an investment-grade credit rating from a SEC-registered rating agency. Where the eligibility criteria are not met, the CP must be supported by a guarantor or other approved credit enhancement.¹² Since the new regime took effect, a substantial number of commercial paper programmes have been approved. As of 23rd October 2025, the total approved amount of commercial papers stood at approximately ₦683.8 billion, covering a wide range of issuers and series.

3. Revision of the Investment Framework for Pension Fund Assets

3.1. In 2025, the National Pension Commission ("PenCom"), under its powers under the Pension Reform Act 2014, issued the Revised Regulation on the Investment of Pension Fund Assets (the "Revised PenCom Regulation").¹³ The Revised PenCom Regulation consolidates and updates the investment framework applicable to Pension Fund Administrators ("PFAs") and Pension Fund Custodians ("PFCs"), showing a more comprehensive and forward-looking approach to pension fund management.

3.2. Under the Revised PenCom Regulation, PFAs are now permitted to invest in a wider range of assets/investment arrangements, including:

1. securities lending and repurchase agreements conducted on any exchange recognised and approved by the SEC or Central Bank of Nigeria, subject to compliance with specific conditions set out in the Revised PenCom Regulations;¹⁴
2. utilising derivatives for risk management purposes only;¹⁵
3. investing in gold-backed instruments;¹⁶ and
4. allocate funds to eligible agriculture-focused instruments such as debt securities, equities and infrastructure projects within the agricultural value chain, provided such instruments meet the eligibility, quality, valuation, and risk management requirements.¹⁷

3.3. The Revised PenCom Regulation also introduces more stringent concentration limits designed to mitigate portfolio risk, including caps on exposure to any single corporate issuer at five per cent (5%) of pension fund assets and a limit of two and a half per cent (2.5%) for any single issue within each fund category.¹⁸

3.4. Finally, PFAs are now expressly required to incorporate environmental, social and governance (ESG) considerations into their investment decision-making processes, reflecting a clear policy shift toward responsible investing and promotion of sustainable national development.¹⁹

4. PenCom Recapitalisation

4.1. On 26^th September 2025, PenCom released a circular introducing Revised Minimum Capital Requirements for Licensed PFAs and PFCs ("PenCom Circular").20 Under the new directive, PFAs with assets under management ("AUM") of ₦500 billion or more must maintain a minimum capital equivalent of ₦20 billion plus 1% of AUM exceeding ₦500 billion, while PFAs with smaller AUM levels must maintain a minimum capital of ₦20 billion. Special-purpose PFAs such as NPF21 Pensions and the Nigerian University Pension Management Company are required to maintain a higher threshold of ₦30 billion and ₦20 billion, respectively.

4.2. In parallel, PFCs are required to meet a new formula-based threshold of ₦25 billion plus 0.1% of Assets Under Custody. The PenCom Circular specifies that the revised capital requirements could be met through shareholders' funds unimpaired by losses. Which means the new capital requirement is not limited only to share capital.

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