Reform as SEC introduces T+1 June 1

By Philippine Duru

philippineobetoduru@gmail.com

08034905774

Nigeria’s capital market is set for a major operational shift as the Securities and Exchange Commission (SEC) has announced the rollout of a T+1 settlement cycle for equities and commodities transactions, effective June 1.

Under the new framework, trades executed on the Nigerian Exchange will now be settled one business day after the transaction date, replacing the previous longer settlement cycle. The reform is expected to significantly improve market efficiency, liquidity, and investor confidence in the country’s financial system.

The move aligns Nigeria with global best practices, as several advanced markets have already adopted or are transitioning toward shorter settlement cycles to reduce counterparty risk and enhance trading speed.

According to the SEC, the decision is part of broader efforts to modernise the Nigerian capital market infrastructure, reduce systemic risks, and improve capital flow across equities and commodity trading platforms.

Market operators say the T+1 settlement system will allow investors to receive funds and securities faster, improving cash flow and enabling quicker reinvestment decisions. It is also expected to reduce exposure to settlement failures and credit risks associated with longer processing periods.

The Commission noted that extensive consultations were carried out with key stakeholders, including the Nigerian Exchange, Central Securities Clearing System, brokerage firms, custodians, and registrars, to ensure a smooth transition.

Industry experts have described the reform as a landmark development that could enhance Nigeria’s attractiveness to foreign portfolio investors, who often prioritise markets with faster and more efficient settlement systems.

They also believe the change could boost trading volumes on the exchange as improved settlement speed typically encourages higher participation from institutional investors and algorithmic trading platforms.

However, analysts caution that the success of the T+1 system will depend on the readiness of market infrastructure, including technology upgrades, operational coordination, and investor education ahead of implementation.

The SEC said it is committed to ensuring a seamless transition and will continue working closely with market stakeholders to address any operational challenges that may arise during the rollout phase.

Nigeria’s capital market has undergone several reforms in recent years aimed at deepening liquidity, improving transparency, and strengthening regulatory oversight in line with international standards.

The introduction of T+1 settlement is expected to further position the Nigerian financial market as a more competitive and efficient destination for domestic and global investors.