The Central Bank of Nigeria (CBN) has called on the Senate to exercise caution in deliberations over the proposed Investment and Securities Bill, 2024, to avoid creating unnecessary conflict between the CBN and the Securities and Exchange Commission (SEC). This appeal was made during a public hearing on the bill, organized by the Senate Committee on Capital Markets.
The Investment and Securities Bill, 2024, aims to replace the current Investment and Securities Act of 2007. It seeks to introduce updated legal frameworks for managing Nigeria’s capital markets, regulating investments, and fostering innovation in areas like cryptocurrencies and commodities markets.
At the hearing, representatives from key institutions, including the CBN, SEC, and other stakeholders, shared their perspectives on the bill. While there was general support for the initiative, differing views emerged on specific provisions.
Dr. Tukur Galadima, who represented the CBN at the hearing, raised concerns about certain sections of the proposed bill. He argued that granting SEC unchecked authority over all public companies could overlap with the CBN’s regulatory role, particularly in supervising financial institutions that operate in the capital market.
One of the contentious issues he pointed out was the provision allowing the use of cash to purchase securities. According to Dr. Galadima, this would violate existing anti-money laundering laws and could encourage financial irregularities.
“You cannot use cash to buy securities. It is contrary to provisions of the law against money laundering,” he stated.
Another concern raised by the CBN was Section 193 of the bill, which permits investments in multiple currencies. Dr. Galadima emphasized that currency-related policies fall exclusively under the purview of the CBN and urged the Senate to remove the provision.
Despite these reservations, the CBN expressed overall support for the proposed law, acknowledging its potential to improve investment regulations and enhance the efficiency of Nigeria’s capital market.
In contrast, the Director-General of the SEC, Dr. Emomotimi Agama, strongly supported the proposed legislation, describing it as essential for Nigeria’s economic growth. He emphasized the need to modernize the regulatory framework to align with global best practices.
“For Nigeria to get it right among the comity of nations, as far as the capital market is concerned, the proposed law needs to be passed before the year runs out,” Dr. Agama said.
He added that the bill would significantly boost the Nigerian economy by enhancing the commodity market and providing legal clarity for emerging sectors like cryptocurrency.
The public hearing also featured presentations from other key stakeholders, including:
- Pension Commission (PENCOM): Advocated for stronger provisions to protect investors’ funds in the capital market.
- Nigeria Deposit Insurance Corporation (NDIC): Supported the bill’s objectives and offered suggestions to ensure robust oversight of financial institutions.
- Chartered Institute of Stockbrokers and Capital Market Solicitors Association: Backed the bill for its potential to improve transparency and governance in market operations.
- Institute of Capital Market Registrars: Highlighted the bill’s role in attracting foreign investments and boosting investor confidence.
Each organization contributed insights aimed at refining the proposed legislation to meet the needs of Nigeria’s evolving financial ecosystem.
Closing the session, Senator Osita Izunaso, Chairman of the Senate Committee on Capital Markets, underlined the significance of the Investment and Securities Bill. He described it as a foundational law for Nigeria’s capital market, stressing that its provisions would shape the sector’s future.
“The SEC bill is very sensitive, being the ombudsman law covering the entire capital market,” Senator Izunaso said. He assured stakeholders that the committee would carefully consider their input to ensure the bill effectively addresses challenges in the sector while promoting growth and innovation.
The Senate will review the feedback from stakeholders as it finalizes deliberations on the bill. While the CBN and SEC have differing opinions on certain provisions, both institutions agree that an updated legal framework is necessary to modernize Nigeria’s capital markets.
If passed into law, the Investment and Securities Bill, 2024, could play a pivotal role in positioning Nigeria as a competitive player in global financial markets, while addressing issues such as currency regulation, anti-money laundering, and investment diversification.
By balancing the concerns of regulatory bodies like the CBN with the aspirations of the SEC and other stakeholders, the Senate aims to craft a law that fosters growth, safeguards investors, and strengthens the country’s economy.
