A brewing regulatory overlap between the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC) has triggered serious concern across the financial markets, as market operators warned that recent policy actions could destabilise confidence and undermine statutory mandates set out in Nigeria’s Investment and Securities Act (ISA) 2007 and its updated 2025 version.

The controversy centres on the CBN’s latest effort to expand its direct influence over fixed-income trading and market infrastructure. The apex bank is pushing forward with plans for an independent settlement and trading system for federal government securities — widely believed to be anchored on its S4 settlement platform — despite existing securities law that confers such powers exclusively on the SEC.

Under ISA 2025, the SEC is recognised as the apex regulator of the capital market, including all financial market infrastructures (FMIs) dealing in securities such as bonds, treasury bills, and commercial papers. Analysts say the CBN’s recent initiative appears to sidestep these provisions, creating overlapping jurisdiction that could distort market governance and weaken institutional credibility.

According to market intelligence from Proshare Economic and Market Intelligence Unit (EMIU), three main issues are at stake:
1. The CBN Act does not allow the Bank to directly run commercial ventures without federal approval and separate incorporation.
2. The S4 settlement platform is not registered under ISA 2007 or ISA 2025 requirements.
3. Direct regulatory and operational influence by the CBN risks a clear conflict with the SEC’s statutory authority.

Capital market stakeholders warned that these concerns are not merely technical. They say uncertainty in regulatory control has already sent worrying signals to global investors, who closely track governance standards in Nigeria’s growing fixed-income market — now a cornerstone for domestic and foreign portfolio investment.

At the centre of the dispute is the role of FMDQ Group, Nigeria’s dominant fixed-income and foreign exchange trading infrastructure. The CBN’s attempt to assume functions currently performed by FMDQ — including clearing, settlement, and trading oversight — has raised fears of commercial displacement and value erosion for its shareholders.

Experts argued that instead of duplicating existing systems, the CBN should support the strengthening of current FMIs while leaving regulatory enforcement with the SEC, as clearly outlined in the new ISA. They emphasize that all FMIs must be registered with the Commission to ensure accountability, market transparency, and investor protection.

A recent position paper circulating among industry operators questions the legality of the CBN’s request — via a letter to the Financial Markets Dealers Association (FMDA) dated September 29, 2025 — to assume direct responsibility for the Nigerian fixed-income market infrastructure. The paper insists that fixed-income market operations sit firmly within the capital market regulatory space, not under monetary policy administration.

Critics caution that excessive regulatory expansion by the CBN risks blurring the line between its monetary stabilization mandate and fiscal-related activities involving government securities issuance and trading. One source pointed to a recent episode where state governors publicly thanked the CBN Governor for “supportive fiscal policy” — an acknowledgment they say underscores a growing but improper shift.

“Interloping always creates chaos,” one senior market analyst warned. “The CBN has built a respected reputation for professionalism in monetary management. It should not jeopardise that by venturing into an area where the SEC is clearly empowered by law.”

Still, stakeholders recognize that the CBN has historically contributed significantly to the evolution of Nigeria’s fixed-income market. From nurturing FMDQ in its formative years to deepening liquidity in government securities, the Bank has played a strategic developmental role.

The major worry now is that well-intended intervention could trigger a “Cobra effect” — solving one perceived problem while creating bigger structural challenges that erode market confidence, disrupt governance clarity, and threaten Nigeria’s economic reform momentum.

To avert damage, industry experts and policy observers are calling for urgent dialogue between the CBN, SEC, and other market institutions to reaffirm regulatory boundaries and protect the integrity of the capital market ecosystem.

“Strong institutions — not competing mandates — are what drive investor trust,” an operator said. “Nigeria cannot afford confusion at a time when global investors are closely watching.”

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