WorldStage– The Securities and Exchange Commission (SEC), says that Nigeria’s transition to a T+2 settlement cycle in the capital market will enhance market efficiency, reduce risks, and strengthen investor confidence.
The T+2 settlement cycle is a standard for securities transactions where the final transfer of ownership and payment occurs two business days after the trade date.
For instance, a stock bought on a Monday would be fully settled by the following Wednesday (T+2), meaning the buyer must have paid for the stock and the seller must have delivered it by then.
Dr Emomotimi Agama, the Director-General of SEC, said this at a roundtable on “Ensuring Stakeholder Readiness for T+2 Settlement” held in Abuja on Wednesday.
Agama said the cycle was not just a technical reform but a major milestone that would make the Nigerian market more competitive and resilient.
He said that T+2 settlement cycle geared toward shortening the time between trade execution and final settlement, would lower market exposure and minimise the potential for defaults.
The director-general said that faster settlement would improve liquidity by returning capital to investors, enabling them to reinvest and contribute to greater market activity.
”A shorter settlement cycle is a hallmark of a mature, dynamic, and competitive market.
”It directly addresses several key objectives and it reduces counterparty risk and market exposure.
”The less time between trade execution and final settlement, the lower the potential for a default to ripple through the system.
“It boosts market liquidity by returning
capital to investors more quickly, allowing for its redeployment and fostering greater market activity.
”It aligns our market with international best practices, enhancing our attractiveness to foreign investment and reinforcing Nigeria’s position as a key player in the global financial arena,” he said.
Agama said that many advanced markets were already moving toward T+1 settlements, adding that Nigeria must continue to evolve to remain globally relevant.
He called on stakeholders to engage collaboratively to identify potential bottlenecks, share best practices, and agree on a clear roadmap for implementation.
The director-general reaffirmed SEC’s commitment toward providing the necessary regulatory support and guidance.
Agama urged all market participants to work together to make the T+2 transition a success and a proud milestone for the country’s financial markets.
