The Securities and Exchange Commission (SEC) is the government agency responsible for regulating and developing the Nigerian capital market. As an independent regulatory authority, the SEC plays a pivotal role in protecting investors, maintaining fair and orderly markets, and facilitating capital formation in Nigeria.

History and Establishment of the SEC

The origins of the SEC date back to 1962 when the Lagos Stock Exchange was established as the country’s first stock exchange. However, it was not until 1973 that the Federal Military Government promulgated the Nigerian Enterprises Promotion Decree which led to the establishment of the Capital Issues Committee. This committee was responsible for regulating the issuance and sale of securities in Nigeria.

In 1979, the Nigerian Enterprises Promotion Decree was amended and replaced by the Nigerian Enterprises Promotion Act. This established the Securities and Exchange Commission as the apex regulatory organization for the Nigerian capital market. The SEC officially began operations in 1980.

The functions and powers of the SEC were further strengthened with the enactment of the Investments and Securities Act No. 45 in 1999 and the Investments and Securities Act No. 29 in 2007 which repealed and replaced the initial Act.

Mandate and Responsibilities of the SEC

As provided in the Investments and Securities Act 2007, the core mandate of the SEC is to:

  • Regulate investments and securities business in Nigeria.
  • Register and regulate securities exchanges, capital trade points, futures, options and derivatives exchanges, commodity exchanges and any other recognized investment exchange.
  • Register securities to be offered for subscription or sale to the public.
  • Render assistance as may be deemed necessary to promoters and investors wishing to invest in new issues.
  • Prepare adequate guidelines and organise training programs and disseminate information necessary for the development of the Nigerian capital market.
  • Protect the integrity of the securities market against abuses arising from the practice of insider trading.

To effectively carry out these functions, the SEC is responsible for:

Regulating the Capital Market

  • Maintaining oversight over the Nigerian Stock Exchange and other trading platforms.
  • Approving and regulating mergers, acquisitions, takeovers and all forms of business combinations.
  • Determining the suitability of all securities for purchase by the general public.
  • Conducting investigations into the affairs of public companies and capital market operators suspected of violating securities laws.

Registering and Licensing Market Operators

  • Registering securities exchanges, capital trade points, futures, options, derivatives exchanges, commodity exchanges and any other recognized investment exchange.
  • Licensing dealers, broker-dealers, investment advisers and their agents, portfolio and fund managers, rating agencies, securities depository agents and other capital market operators.

Protecting Investors

  • Establishing a nationwide trust scheme to compensate investors whose assets are mismanaged by licenced operators.
  • Working to protect the integrity of the market against insider trading abuses and other unfair trade practices.
  • Promoting fair dealings and high standards of integrity in securities business.
  • Reviewing, approving and regulating takeovers, mergers and all forms of business combinations.
  • Promoting market development through the creation of an enabling environment.

Organizational Structure of the SEC

The governing board of the SEC consists of the following members:

  • A part-time Chairman
  • The Director General as the chief executive officer
  • Three full-time Commissioners
  • A representative of the Federal Ministry of Finance
  • A representative of the Central Bank of Nigeria

The Commission also has four principal departments/divisions headed by Executive Commissioners who report to the Director-General:

Corporate Services

This department provides general administration for the day-to-day activities of the Commission. It also coordinates all matters relating to the Commission’s workforce.


This department regulates the capital market operators and assets managers. It is in charge of registration, monitoring of compliance and reviewing of returns by these organisations.

Market Development

This department is responsible for articulating and implementing strategic initiatives to develop and broaden the Nigerian capital market.

The department enforces both the Investments and Securities Act 2007 and the SEC rules and regulations. It prosecutes offenders while also resolving capital market disputes.

Key Milestones and Achievements of the SEC

Since its establishment, the SEC has played a pivotal role in the development and regulation of the Nigerian capital market. Some of its major achievements include:

  • Demutualization of the Nigerian Stock Exchange – The SEC provided guidance and regulation for the demutualization process which separated the self-regulatory powers of the Exchange from its commercial interests. This enhanced transparency.
  • Introduction of Code of Corporate Governance – In 2003, the SEC released a Code of Best Practices that improved corporate governance standards for public companies.
  • Commodities Exchanges – The SEC has licensed several commodities exchanges including AFEX Commodities Exchange Limited, Lagos Commodities and Futures Exchange and FMDQ OTC Securities Exchange.
  • National Investor Protection Fund – The SEC established this Fund in 2008 to compensate investors in the event of insolvency, bankruptcy or negligence of a capital market operator.
  • Complaints Management Framework – A framework to promptly resolve complaints and enquiries from investors and other stakeholders thereby boosting investor confidence.
  • E-Dividend Mandate Management System – Launched in 2015 enabling investors to conveniently collect their dividends electronically.
  • Direct Cash Settlement – Launched in 2016 allowing investors receive proceeds of their transactions directly into their bank accounts within 24 hours.

Regulations and Guidelines Issued by the SEC

To properly regulate securities business in Nigeria, the SEC has introduced various rules, guidelines and circulars. Some of the key regulations include:

  • Securities and Exchange Commission Rules 2013
  • Rules on Business Combination 2016
  • Rules on Demutualization of Exchanges 2010
  • Rules on Minimum Capital Requirements for Capital Market Operators 2014
  • Rules on Exchange Traded Derivatives 2015
  • Rules on Registrars 2015
  • Rules on Green Bonds Issuance 2018
  • Guidelines on Market Making 2018
  • Guidelines on Issuance of Corporate Bonds 2019

Opportunities and Developments in the Nigerian Capital Market

Despite having one of the largest capital markets in Africa, the Nigerian capital market remains shallow with huge potential for growth. The SEC has identified key initiatives to deepen the market including:

Non-Interest Capital Market

Following the introduction of non-interest banking, the SEC is working on rules to facilitate non-interest capital market products including sukuk bonds.

Electronic Dividend Mandate Management System

To increase the convenience of dividends payment and electronic bonus issues.

Direct Cash Settlement

To settle secondary market transactions within 24 hours instead of the current T+3 settlement cycle.

Dematerialization of Share Certificates

To reduce the volume of physical share certificates and enhance convenience through electronic shares.

Financial Literacy

Carrying out various campaigns and programs to improve financial literacy and attract new retail investors.


Supporting fintech solutions and innovation through regulatory sandboxes and collaboration with startups.

Challenges Facing the SEC

While the SEC has recorded significant achievements, it still faces some challenges in regulating and developing the Nigerian capital market including:

  • Low levels of financial literacy discouraging capital market investments.
  • Infrastructural inadequacies like poor internet connectivity impairing access.
  • Low confidence and trust from retail investors due to past scandals.
  • Dominance of the banking sector over capital market financing.
  • High issuance costs deterring small businesses from tapping the capital market.
  • Illiquidity and low depth of the equities and bonds markets.
  • Shortage of skilled workforce leading to challenges in supervision.

Outlook for the SEC

The SEC remains committed to its mandate of regulating investments and securities business in Nigeria. Some of its priorities over the next few years will be:

  • Embracing technology and innovation through regulatory sandboxes.
  • Improving market liquidity and depth.
  • Enhancing product offering through new instruments.
  • Strengthening market infrastructure.
  • Deepening disclosure and transparency.
  • Increasing synergies with other regulators like PenCom, CBN, and NAICOM.
  • Attracting new issuers and investors into the capital market.
  • Pushing for favourable legislation and reforms.

With these strategic initiatives, the SEC will continue playing a leading role in developing the Nigerian capital market and protecting investors.

In conclusion, since its inception in 1979, the SEC has been pivotal to regulating and growing investments and securities business in Nigeria. As the apex regulatory organization, it has powers over capital market operators, securities exchanges and public companies. The SEC has introduced reform measures that have deepened the market and boosted investor confidence. However, Nigeria’s capital market remains shallow with huge potential for growth. The SEC has opportunities to leverage technology, improve structures and attract more issuers and investors. With proper regulation and initiatives, the SEC can unlock the immense potential of the Nigerian capital market.