Stockbrokers clarify FTSE Russell’s concerns on Nigeria’s T+1 settlement cycle

By Peter Egwuatu

The Chartered Institute of Stockbrokers (CIS) has described FTSE Russell’s decision to defer Nigeria’s planned reclassification to Frontier Market status as a temporary review process rather than a reversal of the country’s capital market reforms, stressing that Nigeria’s newly adopted T+1 settlement cycle remains a landmark achievement capable of strengthening investor confidence and market efficiency.

The Institute said the postponement announced by FTSE Russell on June 30, 2026, followed the global index provider’s decision to further assess the practical implications of Nigeria’s migration from a T+2 to a T+1 securities settlement cycle for international institutional investors.

According to CIS, Nigeria’s transition to the T+1 settlement framework on June 1, 2026, represents one of the most significant reforms in the country’s capital market history, making Nigeria the first capital market in Africa to implement the shortened settlement cycle.

The Institute noted that the reform aligns Nigeria with major global markets that have adopted faster settlement systems to improve operational efficiency, reduce settlement risk and enhance liquidity.

“The introduction of T+1 settlement demonstrates Nigeria’s commitment to international best practices and strengthens the country’s competitiveness within the global investment community,” the Institute stated.

CIS explained that FTSE Russell’s concerns centre on whether the shortened settlement period could, in practice, create a de facto  prefunded  market for foreign institutional investors operating across multiple jurisdictions and time zones.

However, the Institute maintained that Nigeria’s migration to T+1 has not altered the country’s Delivery versus Payment (DvP) settlement model, under which securities and cash are exchanged simultaneously at settlement.

“The implementation of T+1 does not require foreign portfolio investors to  prefund  their transactions. The market continues to operate under internationally recognised Delivery versus Payment principles, with the only change being the reduction of the settlement period from two business days to one.

“We recognise the operational challenges arising from the shortened settlement cycle. Accordingly, sustained engagement and constructive collaboration with all stakeholders will be crucial to refining the reforms, addressing emerging issues, and ensuring that no category of investor is disadvantaged or unintentionally excluded from participating in the Nigerian capital market,”  CIS stated.