Paragraph 1: Introduction to the Two-Day Settlement Cycle in Nigeria’s Capital Market
The Nigerian capital market is poised for a significant transformation with the planned implementation of a two-day (T+2) securities settlement cycle, scheduled to take effect on November 28, 2025. This initiative, jointly announced by the Central Securities Clearing System Plc (CSCS) and the Nigerian Exchange Limited (NGX), marks a crucial step towards enhancing market efficiency, mitigating counterparty risks, and aligning Nigeria’s capital market operations with international best practices. The move is part of a broader reform agenda spearheaded by the Securities and Exchange Commission (SEC) to bolster the global competitiveness of Nigeria’s capital market. The current system of T+3, where trades settle three days after execution, will be replaced with the more efficient T+2 model.
Paragraph 2: The Regulatory Perspective and Roadmap for Future Enhancements
The SEC has emphasized its commitment to driving further improvements in settlement efficiency, with plans to transition to a T+1 cycle in the subsequent year and ultimately aiming for same-day (T+0) settlement. This ambitious roadmap underscores the regulator’s focus on modernizing market infrastructure and fostering investor confidence. Bola Ajomale, Executive Commissioner (Operations) at the SEC, urged all market participants to actively prepare for these changes and engage their clients effectively. The SEC views this initiative as integral to its comprehensive reforms aimed at elevating the Nigerian capital market to global standards.
Paragraph 3: Preparatory Measures Undertaken by Key Market Infrastructure Providers
CSCS, the central securities depository responsible for clearing and settlement of trades, has undertaken extensive preparations to ensure a smooth transition to the T+2 cycle. Adeyinka Shonekan, Executive Director representing the MD/CEO of CSCS, highlighted the establishment of a stakeholder-driven committee tasked with performing gap analysis and benchmarking CSCS processes against global best practices. This careful planning underscores the commitment to minimizing disruptions and ensuring a seamless experience for all market operators. Furthermore, CSCS has invested in upgrading its infrastructure, reviewing operational procedures, and establishing a robust risk management and compliance framework to support the new settlement system. Onome Komolafe, Divisional Head of CSCS Depository, emphasized these enhancements, highlighting the organization’s readiness for the upcoming change.
Paragraph 4: NGX’s Role in Facilitating the Transition to T+2
The Nigerian Exchange Limited (NGX), as the primary trading platform, has also played a pivotal role in preparing for the T+2 implementation. Jude Chiemeka, MD/CEO of NGX, affirmed the Exchange’s readiness, citing market-wide simulation exercises, proactive communication strategies, and dedicated support systems designed to facilitate a seamless changeover. The NGX’s proactive engagement with market participants aims to ensure a smooth transition and minimize any potential operational challenges. The careful planning by both NGX and CSCS reflects the significance of this change and its broad impact on the capital market ecosystem.
Paragraph 5: Market-Wide Collaboration and Preparedness across Other Market Operators
The collaborative effort extends beyond CSCS and NGX, with other market operators, including the Lagos Commodities and Futures Exchange (LCFE) and NASD Plc, actively participating in the preparations. These operators have undertaken system testing, capacity building initiatives, and enhanced stakeholder education programs to ensure they are fully prepared for the T+2 implementation. This market-wide collaboration is critical for achieving a synchronized transition and minimizing potential disruptions across the broader financial ecosystem. The joint efforts reinforce the commitment to modernizing Nigeria’s capital market infrastructure.
Paragraph 6: Projected Benefits and Long-Term Impact of the T+2 Settlement Cycle
The transition to a T+2 settlement cycle is expected to yield numerous benefits for the Nigerian capital market. By shortening the settlement period, the initiative will enhance market efficiency, reduce counterparty risk, and improve liquidity. It will also bring Nigeria’s capital market practices in line with international standards, attracting more foreign investment and promoting greater confidence in the market. The reduced settlement time will translate to faster access to funds for investors, a more dynamic trading environment, and improved overall market efficiency. This modernization effort reinforces Nigeria’s commitment to building a robust and globally competitive capital market that can effectively support economic growth and development.
