SEC TIGHTENS T+1 SETTLEMENT RULES, FIXES 5PM DEADLINE

The Securities and Exchange Commission (SEC) has prescribed 5:00 p.m. on the first business day after a trade as the settlement cut-off time for equities and commodities processed through the Central Securities Clearing System (CSCS).

The Commission disclosed this in a circular issued to capital market operators and other stakeholders on Wednesday as part of measures to ensure smooth implementation of the T+1 settlement cycle in Nigeria’s capital market.

Under the new arrangement, market participants are required to ensure that eligible transactions are fully funded by 5:00 p.m. on T+1 to facilitate settlement under the Delivery versus Payment (DvP) framework.

The SEC said a broker/dealer that fails to provide sufficient funds to meet its settlement obligations within the stipulated period would be subject to the CSCS Default Management Procedure and other applicable settlement rules of the relevant exchange.

The Commission also clarified that foreign portfolio investors are not required to pre-fund their trading accounts before executing transactions in the Nigerian market.

It, however, directed capital market operators handling such transactions to put adequate systems and controls in place to ensure that funding and settlement obligations are completed within the required timeframe.

The latest clarification builds on the SEC’s previous directives on settlement cycles, including its June 3, 2025 circular on the T+2 settlement cycle for equities and the May 15, 2026 directive announcing the move to T+1.

T+1 requires eligible securities transactions to be completed one business day after the date of the trade, effectively reducing the time between trade execution and settlement.

According to the SEC, the shorter settlement period is expected to make the Nigerian market more efficient and resilient by reducing settlement and counterparty risks while improving liquidity.

The Commission said the reform would also bring Nigeria’s post-trade infrastructure closer to international standards and enhance the market’s appeal to both local and foreign investors.