Chartered Institute of Stockbrokers says Nigeria’s shortened settlement cycle remains landmark achievement 

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.

In a statement on Thursday, 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.

The Institute said concerns over prefunding should therefore be viewed as operational issues requiring further clarification rather than evidence of structural weaknesses in Nigeria’s capital market.

According to CIS, the review period presents an opportunity for regulators, market operators and other stakeholders to engage constructively with FTSE Russell, global custodians and international investors by demonstrating that Nigeria’s settlement infrastructure remains efficient, accessible and fully aligned with global standards.
The Institute also pointed to Pakistan’s experience as evidence that T+1 settlement and Frontier Market classification are compatible. Pakistan adopted the T+1 settlement cycle earlier in 2026 while retaining its place in the FTSE Russell Frontier Market Index, illustrating that accelerated settlement is not inconsistent with Frontier Market status where appropriate operational safeguards exist.

CIS urged Nigerian capital market stakeholders to sustain ongoing reforms by strengthening foreign exchange accessibility, enhancing straight-through processing, improving cross-border settlement coordination and providing empirical evidence that foreign investors can settle transactions efficiently without compulsory prefunding.

The Institute further emphasised that Nigeria’s successful implementation of the T+1 settlement framework reinforces the country’s position as a leader in capital market innovation on the African continent.

While acknowledging that the postponement delays Nigeria’s expected return to the FTSE Russell Frontier Market Index, CIS expressed confidence that the outstanding concerns can be satisfactorily addressed before the index provider concludes its review.

“The current review should be seen as an opportunity to validate the resilience and efficiency of Nigeria’s capital market infrastructure. With continued collaboration among regulators, exchanges, custodians, brokers and international investors, Nigeria remains well positioned to secure its return to Frontier Market status and further strengthen its reputation as one of Africa’s most dynamic investment destinations,” the Institute concluded.