FTSE Russell faces backlash as securities dealers defend Nigeria’s T+1 market reform

Nigeria’s capital market community has mounted a strong defence of the country’s recent T+1 settlement reform after FTSE Russell suspended its planned reclassification of Nigeria to Frontier Market status.

The global index provider announced the decision on Tuesday, citing the need for further assessment of the operational impact of Nigeria’s transition to a T+1 settlement cycle.

Market operators, however, argue that the decision places undue emphasis on a single operational issue while overlooking the broader regulatory, technological and structural reforms that have strengthened Nigeria’s capital market over the past few years.

The postponement has surprised many stakeholders who viewed the migration to T+1 settlement as an important milestone in improving market efficiency and aligning Nigeria with global best practices.

Rather than celebrating the reform, operators say the delay risks overshadowing years of progress that had positioned Nigeria for its expected return to FTSE Russell’s Frontier Market Index.

What they are saying:

Several market leaders have criticised the decision, describing it as an incomplete assessment of Nigeria’s overall market quality. The sharpest critique of FTSE Russell’s posture came from Chief Blakey Ijezie, founder of Okwudili Ijezie & Co. (Chartered Accountants), who questioned whether the index provider’s decision reflects genuine market quality concerns or an excessive conservatism that punishes reform.

• “FTSE Russell ought to be encouraging Nigeria to do better, not punishing the country for trying to modernize,” Ijezie said.
• “T+1 is not some reckless experiment; it is the direction the entire world is moving in. America did it. India did it. If Nigeria is penalised for following the same global trend that FTSE itself considers best practice elsewhere, then the message to other frontier and emerging markets is that reform is risky and the status quo is safer. That is the wrong incentive to send.”
• “Nigeria was told in March that reclassification was coming in September. Now, barely weeks to that date, after the country has already gone through the disruption of changing its entire settlement infrastructure, FTSE comes back to say it needs more time.
• “If they had concerns about T+1’s compatibility with Frontier status, that should have been flagged before the March decision, not after Nigeria had already implemented the change. You cannot ask a country to climb the mountain and then move the summit,” said the Chartered Accountant.

Ijezie was equally pointed on FTSE Russell’s obligations in the process.

• “I am not saying FTSE Russell’s technical concern about prefunding is illegitimate — it is a real operational question that deserves an answer. 
• But an index provider serious about supporting frontier market development should be working hand-in-hand with Nigeria’s regulators to solve that problem, not simply parking the decision and walking away until August. Encouragement and partnership build markets. Delay and ambiguity discourage the very capital formation FTSE claims to care about.”

Sehinde Adenagbe, the Chairman of the Association of Securities Dealing Houses of Nigeria (ASHON), said:

• “A strong capital market is built on the effectiveness of its ecosystem — the ability of market participants, institutions, and infrastructure providers to work together in creating a seamless environment for capital formation and investment,” he said.
• “The success of Nigeria’s recent banking sector recapitalisation exercise is a reflection of the growing capacity of the market to support large-scale transactions and connect businesses with the capital required for growth. 
• “The depth and resilience of any market are shaped by several factors, including accessibility, transparency, strong corporate governance, effective regulation, and the professionalism of its operators,” he added.

Chief Executive Officer of Wyoming Capital & Partners, Tajudeen Olayinka, argued that Nigeria’s increasingly strong domestic institutional and retail investor base deserves greater recognition because it provides stability during periods of global volatility and reduces excessive reliance on foreign portfolio investors.

Vice President of Highcap Securities Limited, David Adonri, maintained that market quality should not be measured through a single operational criterion in isolation. According to him, liquidity, regulatory oversight, technological infrastructure, transparency and investor participation collectively provide a more balanced assessment of market maturity.

Chief Operating Officer of InvestData Consulting Limited, Ambrose Omordion, described the transition as a long-term infrastructure reform that will ultimately improve market efficiency, transparency and resilience after an initial adjustment period.

More insights:

Market operators argue that FTSE Russell’s assessment focuses too narrowly on one operational issue instead of recognising the significant improvements recorded across Nigeria’s capital market ecosystem.

They insist that T+1 settlement represents a global best practice rather than a weakness and should not overshadow years of structural reforms.

Markets such as the United States, India and Canada already operate T+1 settlement systems while maintaining their positions in major global indices, suggesting that the implementation process—not the settlement model itself—is the real issue.

Operators believe any operational concerns should be resolved through engagement and technical collaboration instead of delaying Nigeria’s Frontier Market reclassification.

They also point to Nigeria’s successful banking sector recapitalisation, growing domestic institutional participation, stronger regulatory oversight and improved market infrastructure as evidence of a more resilient capital market.

A Frontier Market inclusion would have attracted passive inflows from global funds tracking FTSE Russell Frontier Market indices, but the delay postpones those expected investments while the NGX continues to recover from its correction following the May 2026 all-time high of 252,508 points.

Get up to speed:

Nigeria officially migrated from a T+2 to a T+1 settlement cycle on June 1, 2026, requiring equity transactions on the Nigerian Exchange (NGX) to settle within one business day instead of two.

FTSE Russell said it is evaluating whether the shortened settlement window could effectively require international institutional investors to prefund equity trades before executing transactions.

For international institutional investors operating across different time zones, currencies and custody arrangements, settling Nigerian equity trades within 24 hours could, in practice, require funds to be available before orders are placed, effectively creating a prefunding requirement.

FTSE Russell considers mandatory prefunding a negative under its Settlement Cycle (DvP) criterion, one of the five core Quality of Markets benchmarks used to determine Frontier Market eligibility.

The index provider stated that a definitive update on Nigeria’s planned reclassification is now expected by the end of August 2026.

The delay means that Nigeria’s planned September 2026 reclassification remains uncertain despite the approval granted during FTSE Russell’s March 2026 interim review.

What you should know:

FTSE Russell had confirmed Nigeria’s return to Frontier Market status in March 2026, with implementation scheduled for September 2026. Tuesday’s announcement has now placed that timeline under review, with a final decision expected before the end of August.

• Nigeria commenced T+1 settlement on June 1, 2026, reducing the settlement cycle from two business days to one across the entire equities market.
• FTSE Russell’s concern centres on whether the new framework effectively makes Nigeria a prefunded market for international institutional investors under its Settlement Cycle (DvP) criterion.
• The Nigerian Exchange Group, the Securities and Exchange Commission and the Central Securities Clearing System now have a limited window to demonstrate that international investors can participate efficiently without mandatory prefunding.

Market operators maintain that Nigeria’s underlying fundamentals remain intact, supported by strong FY2025 and first-quarter 2026 corporate earnings, completed banking recapitalisation and sustained participation by domestic pension funds.

While the postponement delays the passive inflows expected from Frontier Market index inclusion, industry stakeholders insist that Nigeria’s long-term investment case remains strong and that the country’s broader market reforms deserve greater recognition than a single operational implementation issue.