By Favour Pius
Nigeria’s capital market will transition to a shorter settlement cycle with the adoption of a T+1 regime effective May 29, in a move aimed at enhancing market efficiency, improving liquidity and aligning the domestic bourse with global best practices.
The new settlement framework means that transactions executed on the Nigerian market will be completed one business day after the trade date, replacing the current T+2 cycle where settlement is finalised two days after a transaction.
Market operators say the shift is expected to reduce counterparty risk, accelerate the movement of funds and securities, and boost investor confidence in the market.
The transition is being driven by key market institutions, including the Nigerian Exchange Limited (NGX), Central Securities Clearing System Plc (CSCS) and the Securities and Exchange Commission (SEC), as part of broader efforts to modernise Nigeria’s capital market infrastructure.
Analysts note that the adoption of the T+1 settlement cycle places Nigeria among a growing number of markets globally that are shortening settlement timelines to improve market efficiency and competitiveness.
The move is also expected to enhance liquidity by enabling faster reinvestment of funds by investors, thereby increasing trading activity and overall market depth.
According to market stakeholders, the shorter cycle will reduce the time between trade execution and settlement, limiting exposure to market volatility and operational risks.
However, operators have stressed the need for robust technological infrastructure and seamless coordination among market participants to ensure a smooth transition to the new regime.
Stockbrokers, custodians and other intermediaries are expected to upgrade their systems and processes to meet the tighter settlement timeline, while investors may also need to adjust their trading strategies accordingly.
Analysts say while the transition could initially pose operational challenges, especially for smaller market participants, the long-term benefits in terms of efficiency, transparency and reduced risk outweigh the short-term adjustments.
The adoption of T+1 is also expected to improve Nigeria’s attractiveness to foreign investors, many of whom prioritise markets with faster settlement cycles and stronger post-trade infrastructure.
Market watchers note that the reform aligns with ongoing efforts to deepen Nigeria’s capital market, improve investor protection and support economic growth through more efficient capital mobilisation.
As the implementation date approaches, regulators and market operators are expected to intensify stakeholder engagement and investor education to ensure readiness across the market ecosystem.
