The Nigerian capital market is poised for a significant upgrade with the transition to a T+2 settlement cycle, a move lauded by both the Securities and Exchange Commission (SEC) and the Central Securities Clearing System (CSCS). This shift, from the current T+3 cycle (trade date plus three days) to T+2 (trade date plus two days), signifies a crucial step towards aligning Nigeria with global best practices, ultimately bolstering investor confidence and injecting greater liquidity into the market. This initiative, slated for implementation on November 28, 2025, is a key deliverable of the SEC’s 10-year master plan, reflecting years of meticulous planning, extensive consultations, rigorous testing, and benchmarking against international standards. The decision to adopt T+2, rather than more aggressive options like T+1 or T+0, was strategically made to minimize disruption while maximizing practicality.
The transition to T+2 offers a multitude of benefits for the Nigerian capital market. By reducing the settlement period, counterparty risk is significantly mitigated, freeing up capital to circulate more efficiently and effectively. Quicker access to liquidity provides greater flexibility for investors, enabling faster reinvestment and potentially higher returns. Furthermore, aligning with global standards enhances the attractiveness of the Nigerian market to international investors, fostering greater participation and boosting market depth. The shorter settlement cycle also instills greater confidence in investors, providing reassurance and stability in their transactions. This initiative places Nigeria ahead of many other developed economies, highlighting the country’s commitment to modernizing its financial infrastructure and promoting economic growth.
The SEC and CSCS have emphasized the collaborative nature of this initiative, highlighting the extensive industry engagement that shaped its development. A dedicated market-wide committee, comprising key stakeholders across the entire market ecosystem, spearheaded the transition process. This committee undertook comprehensive research, benchmarking global best practices, meticulously evaluating potential risks and stakeholder impacts, and ultimately recommending the optimal path for Nigeria’s transition. Their comprehensive report, advocating for a phased approach moving from T+3 to T+2 and eventually to T+1, received the SEC’s approval, solidifying the timeline for implementation. The collaborative approach underscores the shared commitment to enhancing the efficiency and competitiveness of the Nigerian capital market.
Key players in the Nigerian capital market have expressed their readiness for the T+2 transition. The Nigerian Exchange Limited (NGX) has confirmed its preparedness, asserting that its existing systems, platforms, and product offerings are fully equipped to handle the shorter settlement cycle. With its fixed income market already operating on a T+2 basis, the NGX is well-positioned to facilitate a smooth transition for the equities market. The NGX’s proactive engagement with market intermediaries, including trading license holders, ensures a coordinated approach across the market, minimizing potential disruptions and maximizing operational efficiency. This aligns with the NGX’s broader strategy to internationalize its exchange and capitalize on global best practices.
The Lagos Commodities and Futures Exchange (LCFE) also welcomes the transition to T+2, recognizing its importance for aligning with global commodity trading practices. As a relatively new exchange, the LCFE emphasizes the need for harmonization with international standards, particularly in the trading of globally traded commodities like gold and petroleum. Operating within a synchronized settlement cycle allows the LCFE to integrate seamlessly with international markets, facilitating efficient cross-border transactions and enhancing its global competitiveness. This alignment is crucial for attracting international participation and establishing the LCFE as a key player in the global commodities market.
The transition to T+2 marks a significant advancement for the Nigerian capital market, enhancing its efficiency, attracting international investment, and boosting investor confidence. The collaborative effort between the SEC, CSCS, and other market participants underscores a shared commitment to modernization and growth. This initiative, a key milestone in the SEC’s long-term strategic plan, positions Nigeria as a leader in financial market development and reinforces its commitment to global best practices. The move is anticipated to strengthen the Nigerian economy by improving capital flow and promoting greater market participation. The focused efforts of key market players, including the NGX and LCFE, further demonstrates a market-wide readiness for this transformative change.
