Nigeria transits to T+1 settlement cycle as NGX eyes N300trn market cap

Nigeria’s capital market on Monday achieved another major milestone in its modernization drive with the formal commencement of the T+1 settlement cycle. The transition, which reduces the settlement period for securities transactions from two business days after trade execution (T+2) to one business day (T+1), was officially launched at a ceremony held at Nigerian Exchange Group (NGX ) in Lagos, attended by regulators, exchanges, brokers, custodians, registrars and other stakeholders. Speaking at the event, Managing Director and Chief Executive Officer of Central Securities Clearing System (CSCS) Plc, Shehu Yahaya Shantali, described the transition as “a defining moment in the evolution of the Nigerian capital market.” “This achievement is far more than a reduction in settlement timelines,” Shantali said. “It is a reflection of the collective ambition of our market, the strength of our institutions, and our unwavering commitment to building a more efficient, resilient, competitive and globally aligned capital market.” He noted that the development marked the latest chapter in a modernization journey spanning more than three decades. Shantali recalled that before the establishment of CSCS, investors often waited between three and six months to receive share certificates following transactions, with the market relying heavily on paper documentation. “The commencement of CSCS operations in April 1997 fundamentally changed the trajectory of the Nigerian capital market. For the first time, Nigeria achieved automated clearing, settlement and electronic custody of securities,” he said. According to him, settlement timelines were reduced from several months to T+5 in 1997 before moving to T+3 in 2000, T+2 in November 2025 and now T+1. He disclosed that the journey to T+1 formally began in 2023 when the Securities and Exchange Commission (SEC) inaugurated a broad-based industry committee to assess the market’s readiness for a shorter settlement cycle. “The work of the committee was extensive and rigorous,” he said. “Over the last three years, stakeholders engaged in consultations, process reviews, technology assessments, market simulations, readiness evaluations and implementation planning exercises.” Shantali said CSCS had invested heavily in infrastructure modernization to support the transition, including API-enabled integrations, enhanced straight-through processing capabilities, automated settlement systems, digital self-service platforms, improved business continuity frameworks and stronger cybersecurity infrastructure. “The benefits of T+1 settlement are substantial,” he said. “A shorter settlement cycle reduces counterparty risk by limiting the period between trade execution and settlement. It improves liquidity by enabling investors to access and redeploy capital more quickly.” He added that the new settlement regime would provide “faster access to capital and greater settlement certainty” for institutional investors while creating “a more efficient investment experience” for retail investors. Director-General of the Securities and Exchange Commission, Dr. Emomotimi Agama, described the launch as a watershed moment for the country’s financial markets. Agama emphasized the practical benefits of the shorter settlement cycle for investors. “What does that mean for a retail investor in Lagos, Kano or Port Harcourt who sells shares today?” he asked. “It means their cash is available tomorrow. Not in two days. Not in three. Tomorrow.” “That is capital freed for reinvestment, for consumption, for business decisions — capital that previously sat locked in the settlement pipeline for longer than necessary.” He said T+1 would also reduce margin requirements, shorten processing times and significantly lower counterparty risk. “Every day that passes between trade and settlement is a day in which market conditions can change, a counterparty can fail, or an operational error can cascade. T+1 closes that window,” he said. The SEC boss said the transition places Nigeria among countries that have adopted faster settlement standards, noting that the United States, Canada and Mexico moved to T+1 in May 2024 while India had already completed its transition. “Capital markets now using T+1 settlement represent 60 per cent of global market capitalisation,” he said. “Nigeria has now joined that company.” “We have not waited for external pressure or a crisis to force our hand. We have moved proactively, deliberately and ahead of several markets that are still planning their transitions.” Agama also highlighted the strong performance of the Nigerian capital market, which he said underlines the need for continued reforms. According to him, total market capitalisation on the Nigerian Exchange stood at N149.88 trillion at the end of 2025, while equities accounted for N98.89 trillion. The Group Chairman of the Nigerian Exchange Group (NGX Group), Dr. Umaru Kwairanga, said with the development, the NGX is poised to meet the N300trillion market capitalisation target. “When DG (referring to SEC DG) mentioned N100 trillion, we said DG would try and we achieved that before the end of last year. “He shifted the goalpost to N300trn. Today we are at N160trn even before the coming of Dangote Refinery. “You can be rest assured that with the type of capital market operations we have, with the dream we have, this is achievable, DG and we are going to give you awards,” Kwairanga said. He added that T + 1 settlement cycle reinforcea the Nigerian market as one of the most efficient markets globally.