Nigeria’s capital market reached a key reform milestone on 28 November 2025 when it officially adopted a T+2 settlement cycle, replacing the longer T+3 structure that had governed transactions for over a decade. The change, led by the Nigerian Exchange Limited (NGX) in conjunction with the Central Securities Clearing System (CSCS) and regulatory authorities, reflects a deliberate effort to accelerate trade completion, strengthen market resilience, and position the country more closely with international post-trade practices.
A T+2 framework ensures that trades are fully settled within two business days. This means cash and securities move between buyers and sellers more quickly, reducing the time capital sits idle in the system. For investors, the shorter cycle allows faster reinvestment and improves overall market liquidity. It also narrows the window during which settlement failure or market disruption could occur, thereby lowering systemic and counterparty risk.
The reform places Nigeria alongside leading global markets including those in the United States, Europe, the United Kingdom, and South Africa, where T+2 has become the accepted norm. This alignment matters for foreign portfolio investors who weigh settlement efficiency and operational reliability when allocating funds to emerging markets. By adopting a familiar settlement standard, Nigeria enhances its credibility and investment appeal.
Transitioning to T+2 followed months of preparation and collaboration. The Securities and Exchange Commission supervised the process, while market operators upgraded their settlement systems, tested new workflows, and revised compliance procedures. Brokers, custodians, registrars, and settlement banks adjusted internal processes to ensure readiness for faster transaction cycles.
In practical terms, brokers now face a tighter timeframe to confirm trade positions and mobilise required cash or securities. On the other hand, investors benefit from quicker access to their assets, reduced uncertainty, and a smoother post-trade experience. International investors may view this as a positive signal, especially at a time when Nigeria is seeking to deepen foreign portfolio inflows and rebuild confidence in its market infrastructure.
This shift complements a broader suite of reforms focused on modernising Nigeria’s capital market. Efforts such as dematerialisation of share certificates, digitisation of issuance processes, and clearing technology upgrades demonstrate a wider push toward efficiency and transparency. Market observers believe that the successful implementation of T+2 could eventually open the door to even shorter settlement windows, mirroring discussions in advanced markets exploring T+1.
More than a procedural adjustment, the adoption of T+2 reflects institutional maturity and strategic intent. As stakeholders adapt to the new settlement rhythm, expectations include lower exposure to settlement risk, faster capital rotation, higher trading activity, and greater investor confidence. With supportive macroeconomic policies and continued regulatory commitment, the reform could meaningfully strengthen Nigeria’s market competitiveness and its integration with global financial systems.
No comments:
Post a Comment