SEC targets near-zero trade fail rate under T+1 settlement by H2 2026

The Securities and Exchange Commission (SEC) says it is focused on achieving a sustained near-zero trade fail rate under Nigeria's newly implemented T+1 settlement framework during the second half of 2026. Director-General of the SEC, Dr. Emomotimi Agama, disclosed this in a statement made available to the News Agency of Nigeria (NAN) on Sunday.

According to Agama, the Commission's priority is to ensure strict delivery-versus-payment discipline across brokers, custodians, settlement banks, and the Central Securities Clearing System (CSCS) Plc as the market adapts to the shortened settlement cycle.

Early data shows positive signs

Agama said initial data since the launch of the T+1 framework in June has been positive. He noted that the Commission aims to demonstrate at least one full quarter of seamless settlement performance. "The early evidence is encouraging, and our objective is to establish a consistent record of clean settlement data under the new framework," he said.

He stressed that foreign investors must be able to complete foreign exchange conversion and funding transactions within the compressed settlement timeline without the need for pre-funding. To support this objective, the SEC is working closely with the Central Bank of Nigeria (CBN), custodians, and settlement banks to facilitate same-day foreign exchange execution and confirmation for portfolio investment flows.

Nigeria transitions to T+1 settlement

Last month, the Central Securities Clearing System (CSCS) Plc officially launched Nigeria's T+1 settlement cycle, completing the country's transition from a two-day settlement framework. This aligns the Nigerian capital market with some of the world's most advanced financial markets. The milestone was announced at a market-wide ceremony attended by SEC, Nigerian Exchange Group (NGX Group), market operators, custodians, registrars, stockbrokers and institutional investors.

The new framework means securities transactions executed on a trading day will now settle on the next business day, reducing the waiting period between trade execution and final settlement.

CCI modernisation and FTSE Russell review

The SEC boss also highlighted the need to modernise the Certificate of Capital Importation (CCI) process to align with the realities of a next-day settlement environment. According to him, the process must be fully digitised, predictable, and efficient to ensure smooth entry and exit for foreign investors. "The Certificate of Capital Importation process must be fully electronic, timely and predictable so that entry and exit are seamless. The Commission has formally engaged the CBN on CCI modernisation to align the regime with T+1 realities," Agama said.

Commenting on FTSE Russell's decision to monitor Nigeria's market during the T+1 transition, Agama described the move as standard practice for global index providers whenever a market undergoes major structural changes. He explained that the review is intended to assess whether the shortened settlement cycle functions effectively in practice, particularly for foreign portfolio investors.

Market outlook remains constructive

Despite expectations of a more selective investment environment in the second half of the year, Agama expressed optimism about the outlook for equities, fixed-income securities, and alternative assets. He noted that the stock market's strong performance in the first half of the year, which saw equities gain 47.4%, may naturally lead to some consolidation. "After a 47.4% first-half advance, some consolidation is natural and indeed healthy," he said.

According to him, several factors continue to support market growth, including bank recapitalisation efforts, a strong pipeline of new listings, improving foreign investor participation, and resilient corporate earnings. For the fixed-income market, Agama said declining inflation and elevated yields have created a favourable environment for investors, with positive real returns across much of the yield curve. He also expects continued issuance of sovereign, sub-national, and corporate debt instruments, including infrastructure and green finance products.

ISA 2025 strengthens market regulation

The SEC chief pointed to the implementation of the Investments and Securities Act (ISA) 2025 as one of the most significant reforms reshaping Nigeria's capital market. According to him, the legislation modernises the regulatory framework, expands SEC's enforcement powers, and formally brings digital assets under regulatory oversight. The Act also criminalises Ponzi schemes with stricter sanctions while strengthening investor protection measures.

Looking ahead, Agama said investors should expect further implementation of the Commission's Capital Market Liquidity Roadmap, continued recapitalisation of market operators, stronger environmental, social and governance (ESG) disclosure standards, enhanced technology-driven supervision, and broader admission of regulated digital asset products.

Recently, global index provider FTSE Russell placed its planned reclassification of Nigeria back to Frontier Market status under further review. The organisation noted that the decision is to allow the index provider to thoroughly assess how Nigeria's recent transition to a shortened T+1 settlement cycle affects international institutional investors. The global index provider stated that it will provide a definitive update on Nigeria's potential return to the Frontier Market index by the end of August 2026.

For Nigerian businesses and investors, the SEC's push for near-zero trade failures under T+1 settlement signals a more efficient capital market. If successful, it should reduce counterparty risk, speed up access to funds for investors, and improve Nigeria's standing with global index providers, potentially attracting more foreign portfolio inflows and supporting the naira.