BY NKECHI NAEVHE-ESEZOBOR—The Securities and Exchange Commission (SEC) has officially established 5:00 p.m. on the first business day following a transaction (T+1) as the strict settlement deadline for all equities and commodities traded through the Central Securities Clearing System (CSCS).
This is contained in a circular issued to capital market operators and other market participants as part of the implementation of the T+1 settlement cycle in the Nigerian capital market.
According to SEC, all transactions in the affected securities must be fully paid by 5:00 p.m. T+1 to ensure compliance with the standard Delivery versus Payment (DvP) settlement procedure.
It warned that where a broker/dealer’s trading account is not adequately funded to meet its settlement obligation within the prescribed period, the default would be managed in line with the CSCS Default Management Procedure and the applicable transaction settlement guidelines of the relevant exchange.
The Commission also clarified that foreign portfolio investors are not required to prefund their accounts for trades in the Nigerian capital market.
However, it said capital market operators facilitating transactions on behalf of foreign portfolio investors must establish and maintain appropriate controls and processes to ensure timely funding and completion of settlements within the prescribed timeframe.
The clarification follows earlier SEC circulars on the implementation of the T+2 settlement cycle for equities transactions, issued on June 3, 2025, and the transition to the T+1 settlement cycle, issued on May 15, 2026.
The T+1 cycle means that eligible securities transactions are settled one business day after the trade date, reducing the period between execution and final settlement.
The SEC said the transition represents a significant milestone in its efforts to build a more efficient, resilient and internationally aligned trading and post-trade environment.
It added that the shorter settlement cycle would improve settlement efficiency, reduce counterparty risk, enhance liquidity and strengthen the competitiveness of the Nigerian capital market.
According to the Commission, the reforms would ultimately improve the attractiveness of the Nigerian market to both domestic and international investors.
