BY NKECHI NAECHE-ESEZOBOR—The Securities and Exchange Commission (SEC) has announced minimum capital requirements for all categories of regulated capital market operators
The commission disclosed this yesterday in a circular posted via its official website that the review is informed by the need to strengthen market resilience, enhance investor protection, align capital adequacy with the evolving risk profile of market activities, and ensure that regulated entities possess sufficient financial capacity to discharge their obligations in a sustainable manner.
“The revised Minimum Capital framework seeks to enhance the financial soundness and operational resilience of market operators; align capital requirements with the scope, complexity, and risk exposure of regulated activities; promote market stability and systemic risk mitigation; and support innovation and orderly development of new market segments, including digital assets and commodities markets.”
Under the new regime, Tier-1 Portfolio Managers managing Collective Investment Schemes (CIS) and Alternative Investment Funds with Net Asset Value (NAV) above N20 billion, or private portfolios exceeding N20 billion in Assets under Management (AuM), must now maintain a minimum capital of N5 billion, up from N150 million.
The SEC further directed that any fund or portfolio manager overseeing more than N100 billion in NAV or AuM must hold capital equivalent to at least 10 percent of the total.
Tier-2 Portfolio Managers with limited scope operations now require N2 billion minimum capital, also up from N150 million.
Similarly, broker-dealers offering client execution, proprietary trading, margin lending and advisory services must now maintain N2 billion in capital, compared with the previous N300 million threshold.
Issuing houses were also affected by the review. Tier-1 issuing houses that provide advisory services without underwriting must now hold N2 billion minimum capital, up from N200 million.
Tier-2 issuing houses that offer underwriting services will require N7 billion, a sharp rise from the previous N200 million.
The SEC also revised requirements for other categories: brokers focused solely on client execution must now maintain N600 million capital, up from N200 million, while proprietary dealers require N1 billion instead of N100 million.
Digital sub-brokers must now hold N100 million capital, up from N10 million, while corporate sub-brokers require N50 million. Individual sub-brokers now need N10 million, compared with N2 million previously.
Inter-dealer brokers saw one of the steepest adjustments, with minimum capital rising from N50 million to N2 billion.
TIMELINE FOR COMPLIANCE
The commission said that all affected entities are required to comply with the revised Minimum Capital Requirements on or before 30 June 2027.
It noted that entities that fail to meet the prescribed requirements within the stipulated timeline shall be subject to appropriate regulatory sanctions, including suspension or withdrawal of registration, as may be determined by the Commission.
TRANSITIONAL ARRANGEMENTS AND GUIDANCE
The Commission said it may, upon application and on a case-by-case basis, consider transitional arrangements where justified. Detailed guidance on compliance modalities and capital verification processes shall be issued separately.
The process takes effect from the date of publication.
