SEC fixes 5 pm deadline for T+1 settlement

The Securities and Exchange Commission (SEC) has fixed 5:00 p.m. on the first business day after a trade as the settlement deadline for equities and commodities transactions cleared through the Central Securities Clearing System (CSCS), tightening compliance requirements under Nigeria’s new T+1 settlement regime.

The Commission said all affected transactions must be fully funded by 5:00 p.m. on T+1 to comply with the standard Delivery versus Payment (DvP) settlement process.

The clarification, contained in a circular issued on Wednesday to capital market operators and other market participants, provides a specific deadline for completing settlements as the Nigerian capital market moves to a shorter settlement cycle designed to reduce transaction risks and improve market efficiency.

Under the T+1 regime, eligible securities transactions are settled one business day after the trade date, cutting the period between execution and final settlement from the previous cycle.

The SEC warned that where a broker or dealer does not have sufficient funds in its trading account to meet settlement obligations by the prescribed deadline, the default would be handled under the CSCS Default Management Procedure and applicable settlement guidelines of the relevant exchange.

The Commission also clarified that foreign portfolio investors are not required to prefund their accounts before trading in the Nigerian capital market.

However, it said capital market operators executing transactions for foreign portfolio investors must establish adequate controls and processes to ensure that funds are available and settlements completed within the prescribed T+1 timeframe.

The new deadline builds on the SEC’s earlier reforms to shorten Nigeria’s settlement cycle, following its June 3, 2025 circular on T+2 settlement for equities and the May 15, 2026 circular announcing the transition to T+1.

The shift means investors and market intermediaries now have less time to resolve funding, documentation and operational issues after executing transactions, placing greater emphasis on liquidity management, trade confirmation and back-office efficiency.

The SEC said the shorter settlement cycle would improve settlement efficiency, reduce counterparty risk and enhance liquidity, while bringing Nigeria’s capital market closer to international market standards.

The Commission added that the reform would strengthen the resilience and competitiveness of the Nigerian capital market and ultimately improve its attractiveness to domestic and foreign investors.

The 5:00 p.m. deadline therefore places settlement discipline at the centre of Nigeria’s latest capital market reform, with brokers and dealers required to ensure that funding and post-trade processes are completed within one business day or face the consequences of settlement default.