SEC Approves T+1 Settlement Transition Framework

The Securities and Exchange Commission (SEC) has issued formal guidance for the transition of Nigeria’s capital market to a T+1 settlement cycle for equities and commodities transactions, effective June 1, 2026, as part of ongoing market reforms.

The directive, contained in a notice signed by SEC management and published on May 18, 2026, outlines operational requirements for capital market operators, exchanges, custodians, registrars, clearing houses, and other stakeholders ahead of the implementation date.

Under the new framework, all eligible trades in Nigeria’s capital market will now settle one business day after the transaction date, replacing the existing T+2 settlement cycle.

SEC stated that the final trading day under the current system will be May 29, 2026, while the new T+1 system will commence on June 1, 2026.

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The Commission also disclosed a transition arrangement in which trades executed on May 29 and June 1, 2026 will both settle on June 2, 2026, creating a convergence window to ensure a smooth migration between settlement regimes.

“All trades executed from June 1 onward will be governed by the T+1 framework,” the SEC stated.

It directed all capital market operators to ensure full operational readiness before the effective date, warning that failure to comply could result in settlement disruptions and regulatory consequences.

The SEC said the reform is part of its broader capital market modernization agenda aimed at enhancing efficiency, improving liquidity, and aligning Nigeria’s market structure with global standards.

The Commission noted that the reduction of the settlement cycle will significantly lower counterparty risk, which refers to the possibility of default between trade execution and settlement.

According to the SEC, compressing settlement from two days to one will reduce the volume of unsettled transactions in the system at any given time and improve overall market stability.

It added that the new framework will improve capital efficiency by enabling brokers, custodians, and institutional investors to access and reinvest funds and securities more quickly.

The regulator stated that Nigeria’s reform trajectory aligns with global developments, noting that major markets such as the United States transitioned to T+1 in 2024, while Canada and Mexico have adopted similar systems. India is also advancing toward faster and near-instant settlement models.

SEC said Nigeria’s accelerated shift reflects its commitment to closing infrastructure gaps and attracting greater foreign institutional participation in the capital market.

The Commission emphasized that the transition process has moved rapidly from T+3 to T+2 and now to T+1 within a short period, requiring swift adaptation from market operators.

It stated that retail investors will benefit from faster access to proceeds from share sales, while institutional investors must adjust back-office systems and reconciliation processes to accommodate the shorter cycle.

SEC further directed all operators to ensure system upgrades, operational testing, and compliance checks ahead of the implementation date to avoid disruptions in settlement processes.

It warned that entities not fully prepared by June 1, 2026 risk regulatory sanctions in the event of settlement failures.

Market analysts described the reform as a significant step toward improving market efficiency, reducing risk exposure, and strengthening investor confidence in Nigeria’s capital market infrastructure.

The Commission maintained that the transition marks a key milestone in its ongoing efforts to modernise market operations and align Nigeria’s financial system with global best practices.