SEC directs market operators to register investment instruments before January deadline

The Securities and Exchange Commission has issued a firm directive requiring all capital market operators to register their investment instruments before January, marking a significant step in its ongoing efforts to strengthen regulatory oversight, improve investor protection, and restore confidence in the nation’s financial markets. The instruction is part of a broader push to enhance transparency and ensure that all products traded within the Nigerian capital market meet the minimum standards of disclosure, compliance, and risk management expected by the regulator.

According to the Commission, the January deadline is non-negotiable and applies to all instruments currently in use, including those that have been operating informally or without complete documentation. The regulator noted that many operators have continued to deploy unregistered products, a practice that exposes investors to unnecessary risks and undermines market integrity. The new mandate is therefore intended to eliminate regulatory gaps, ensure full compliance with existing rules, and streamline the classification and approval of investment products.

The SEC explained that the measure is not punitive but aimed at strengthening governance within the market. By compelling operators to register their instruments, the Commission hopes to improve the quality of information available to investors, ensure proper monitoring of risk levels, and allow the regulator to track ownership structures, investment flows, and the performance of products over time. The Commission emphasised that registration remains one of the most fundamental pillars of an orderly and well-functioning market, adding that the January deadline is intended to give operators reasonable time to regularise their instruments.

In recent years, the Commission has been confronting the growing presence of unregulated products in the market, many of which have been offered by operators outside the purview of the regulator. These instruments often lack proper disclosures, audited performance records, and risk assessments, leaving unsuspecting investors vulnerable to losses. Some products, the Commission noted, were introduced without adequate documentation or clarity on their legal status, prompting the regulator to intervene to protect market participants.

The SEC also warned that operators who fail to comply with the directive will face sanctions, ranging from suspension of their licences to the outright prohibition of the affected instruments. The Commission reaffirmed that strict enforcement will begin immediately after the January deadline, stressing that registered operators have a responsibility to uphold market standards and ensure that their products are properly vetted. The regulator noted that compliance will demonstrate the sector’s commitment to ethical practices and long-term market stability.

Industry operators have begun responding to the directive, with many firms reviewing their product portfolios to identify instruments requiring registration. Several operators have welcomed the move, arguing that proper registration will help eliminate inferior or misleading products that cast a negative image on the sector. They also believe the new requirement will level the playing field by ensuring that all operators compete under the same regulatory framework.

Analysts say the SEC’s directive reflects a global trend where regulators are tightening oversight of investment instruments to prevent abuses, enhance risk monitoring, and address the proliferation of opaque financial products. In developed markets, instruments are subject to rigorous vetting before they are made available to the public. Many experts argue that Nigeria must adopt similar standards to attract credible investments and improve the attractiveness of its capital markets.

The January deadline also aligns with the Commission’s broader reform agenda, which includes strengthening post-trade transparency, improving disclosure standards, and building a more efficient capital formation process. The SEC has been introducing reforms across various market segments, including crowdfunding, custodial services, digital assets, and commodity exchanges. The new requirement for instrument registration is seen as a continuation of these reforms, aimed at creating a more predictable and transparent regulatory environment.

Investor groups have expressed support for the mandate, noting that clear documentation and registration of instruments will empower investors to make informed decisions. They emphasised that many retail investors often fall victim to fraudulent schemes disguised as legitimate investment opportunities. With stricter registration requirements, such schemes will face greater difficulty accessing the market or misleading the public.

Despite the positive reception from many stakeholders, some operators have expressed concern about the short timeline, arguing that the registration process can be lengthy, especially for complex instruments. They urged the SEC to deploy additional resources or streamline the process to ensure timely review of submissions. The Commission, however, insists that the deadline remains firm, adding that operators must take responsibility for early compliance.

As the January cutoff approaches, the SEC says it will continue to engage operators, clarify requirements, and provide technical support where necessary. The Commission reiterated that its goal is not to disrupt market operations but to ensure that all instruments meet global best practices and regulatory benchmarks. It added that compliant operators will benefit from improved investor confidence, stronger risk controls, and enhanced credibility in the financial ecosystem.

 

With the directive now in force, the coming weeks will see heightened activity as operators rush to complete documentation, submit applications, and regularise their instruments. The SEC maintains that the initiative will help create a more orderly, trustworthy, and robust capital market capable of driving sustainable economic growth and attracting long-term investment into the country.