Director-Basic of the Securities and Alternate Fee (SEC), Dr. Emomotimi Agama, has mentioned that Nigeria’s transition to a T+2 settlement cycle within the capital market will considerably improve market effectivity, scale back dangers, and strengthen investor confidence.
He made the assertion at a commerce associations roundtable on “Guaranteeing Stakeholder Readiness for T+2 Settlement” held in Abuja on Wednesday, in accordance with a press release that was issued by the commaaion. Agama mentioned the migration from the present T+3 to T+2 cycle represents a strategic step towards aligning Nigeria’s capital market with world finest practices.
In line with him, the transfer isn’t just a technical reform however a significant milestone that may make the Nigerian market extra aggressive and resilient.
He mentioned: “A shorter settlement cycle is a trademark of a mature, dynamic, and aggressive market.” The brand new cost settlement instantly addresses a number of key goals: It considerably reduces counterparty threat and market publicity. The much less time between commerce execution and last settlement, the decrease the potential for a default to ripple by way of the system.
It’s anticipated to spice up market liquidity by returning capital to traders extra shortly, permitting for its redeployment and fostering larger market exercise. The SEC DG acknowledged that the brand new system aligned “our market with worldwide finest practices, enhancing our attractiveness to international funding and reinforcing Nigeria’s place as a key participant within the world monetary area.
“In the end, a extra environment friendly and safer settlement system strengthens the bedrock of our market—investor confidence”.
Dr. Agama defined that by shortening the time between commerce execution and last settlement, the T+2 system will decrease market publicity and decrease the potential for defaults, including that quicker settlement would enhance liquidity by returning capital to traders sooner, enabling them to reinvest and contribute to larger market exercise.
He famous that many superior markets are already shifting towards T+1 settlements, including that Nigeria should proceed to evolve to stay globally related.
“The worldwide monetary panorama is consistently altering, pushed by expertise and investor demand for effectivity. The transition to T+2 is, subsequently, a strategic crucial to maintain our market aggressive and future-ready,” he mentioned.
The SEC boss emphasised that the success of the transition relies on the collective readiness of all market individuals — from brokers and custodians to clearing homes and traders. He urged commerce associations to take a number one position in getting ready their members for the operational and technological adjustments that the brand new system would require.
“Your readiness and that of your members is the only most essential determinant of our success. This implies recalibrating back-office operations, upgrading expertise methods, streamlining settlement processes, and guaranteeing that every one market individuals are knowledgeable and ready,” he mentioned.
Dr. Agama assured stakeholders that the Fee would work intently with commerce associations, market operators, and Monetary Market Infrastructures such because the Nigerian Alternate Restricted and the Central Securities Clearing System to make sure a clean and coordinated transition.
He mentioned the fee would additionally intensify investor schooling and consciousness campaigns to make sure that all market individuals perceive the implications and advantages of the change.
“The transfer to T+2 is a vital leap ahead for the Nigerian capital market. It’s a testomony to our collective ambition to construct a market that’s environment friendly, resilient, and globally aggressive,” he said.
Agama known as on stakeholders to have interaction constructively and collaboratively to determine potential bottlenecks, share finest practices, and agree on a transparent roadmap for implementation.
He reaffirmed SEC’s dedication to offering the required regulatory assist and steerage, urging all market individuals to work collectively to make the T+2 transition a “resounding success and a proud milestone” for Nigeria’s monetary markets.
