The Securities and Exchange Commission (SEC) says that Nigeria’s transition to a T+2 settlement cycle will enhance market efficiency, reduce risks, and strengthen investor confidence in the nation’s capital market.
The T+2 settlement cycle means that transactions in securities will be completed two business days after the trade date.
For example, a stock purchased on Monday would be fully settled by Wednesday, with payment and transfer of ownership finalised.
Aligning Nigeria’s capital market with global best practices
Speaking at a stakeholder roundtable themed “Ensuring Stakeholder Readiness for T+2 Settlement” held on Wednesday in Abuja, Dr. Emomotimi Agama, Director-General of the SEC, described the transition as a “major milestone” in aligning Nigeria’s capital market with global best practices.
“A shorter settlement cycle is a hallmark of a mature, dynamic, and competitive market,” Agama said.
“It directly addresses several key objectives, it reduces counterparty risk, lowers market exposure, and minimises the potential for defaults.”
A more competitive and resilient market
Dr. Agama explained that the T+2 framework shortens the time between trade execution and final settlement, improving liquidity and efficiency.
“The less time between trade execution and final settlement, the lower the potential for a default to ripple through the system,” he said.
“It boosts market liquidity by returning capital to investors more quickly, allowing for reinvestment and fostering greater market activity.”
He added that the reform would bring Nigeria’s capital market closer to international standards and enhance its appeal to foreign investors.
“It aligns our market with international best practices, enhancing our attractiveness to foreign investment and reinforcing Nigeria’s position as a key player in the global financial arena,” Agama noted.
Stakeholder collaboration and global relevance
The SEC boss noted that while some advanced markets were already adopting T+1 settlements, Nigeria’s move to T+2 was an essential step toward maintaining global relevance.
He urged all stakeholders — including brokers, custodians, clearing houses, and investors — to collaborate in identifying potential bottlenecks and developing a clear roadmap for implementation.
“We must engage collaboratively to share best practices and ensure a smooth transition. The Commission remains fully committed to providing the regulatory support and guidance needed to make this shift a success,” Agama assured.
He described the T+2 transition as both a symbol of progress and a commitment to deepening the integrity of Nigeria’s capital market, positioning it for stronger participation in the global financial system.
What you should know
- Earlier this month, SEC called on Nigerians to embrace investment opportunities in the capital market as a pathway to achieving both personal and national financial independence.
- In an Independence Day message, Agama described the Nigerian capital market as “a critical engine of economic empowerment.”
- He said true independence extends beyond political sovereignty to include financial freedom for every citizen.
