SEC: Here’re market operators minimum capital, their 2027 benchmarks

Nigeria’s Securities and Exchange Commission (SEC) has revised the minimum capital for regulated entities operating in the capital market. SEC requires all affected entities to comply with the revised Minimum Capital requirements on or before June 30, 2027.

The revised minimum capital framework seeks to: enhance the financial soundness and operational resilience of market operators; align capital requirements with the scope, complexity, and risk exposure of regulated activities; promote market stability and systemic risk mitigation; and support innovation and orderly development of new market segments, including digital assets and commodities markets.

The SEC said the minimum capital review is informed by the need to strengthen market resilience, enhance investor protection, align capital adequacy with the evolving risk profile of market activities, and ensure that regulated entities possess sufficient financial capacity to discharge their obligations in a sustainable manner.

According to the SEC, entities that fail to meet the prescribed requirements within the stipulated timeline shall be subject to appropriate regulatory sanctions, including suspension or withdrawal of registration, as may be determined by the Commission.

Read also: SEC’s capital hike puts survival of the fittest to the test

Below are the current minimum capital requirements for the firms and the benchmark capital they are expected to have by June 2027.

Regulated Entities                 Min. Capital (since 2015)      Min. Capital (by 2027)

A)  Core Regulated Functions:

Brokerage Services:

Broker  (client execution only)                       N200 million                           N600 million

Dealer   (proprietary trading only)                 N100 million                           N1billion

Broker-Dealer· client execution,  proprietary trading, margin/securities lending and advisory services.

Sub-Broker (Digital)                                 N300 million                           N2 billion

Sub-Broker (Corporate)                                N10 million                             N100 million

Sub-Broker (Individual)                                N10 million                             N50 million

Inter-Dealer Broker                                        N2 million                               N10 million

Fund/Portfolio Management Services:          N50 million                             N2 billion

Tier 1 –Portfolio Managers (Full Scope)

· Management of Collective Investment Schemes (CIS) and Alternative Investment Funds (Private Equity, Venture Capital, Infrastructure Funds etc.) above N20billion Net Asset Value (NAV).

· Discretionary and  Non-Discretionary  Private Portfolio Management Services above N20 billion Assets under Management (AuM).

· Exposure to foreign instruments up to 40percent of the NAV.

Note – Any Fund and Portfolio Manager with NAV/AuM of more than N100 billion should have a minimum of 10 percent of the NAV/AuM as capital.

N150 million               N5 billion

Tier 2 –Fund/Portfolio Managers (Limited Scope)

· Management of CIS with limited pooled fund creation of not more than 10 times the required capital (N20billion) on Net Asset Value (NAV).

· Discretionary  and  Non-Discretionary Private Portfolio Management Services of not more than N20billion.

· Exposure to foreign instruments of not more than 20 percent of the NAV.

N150million                N2 billion

Tier 3 – Alternative Investment Fund Managers:                  

Private Equity Fund Manager                                     N150million                N500million

Venture Capital Fund Manager                                   N20 million                 N200 million

B)   Non-Core Regulated Functions:

Issuing House:

Tier 1 – Issuing House

· Non-Interest Finance

services

· Advisory &

Arrangement services

· No underwriting

N200million                N2 billion

Tier 2 –Issuing House with Underwriting

· Offers a ‘one-stop-shop’ for issuers.

· Provide underwriting services.

· Renders advisory and product development services.

N200 million               N7 billion

Rating Agency                                                             N150 million               N500 million

Registrar                                                                      N150 million               N2.5 billion

Trustees                                                                       N300 million               N2 billion

Underwriters                                                               N200 million               N5 billion

Investment Adviser (Corporate)                                  N5 million                   N50 million

Investment Adviser (Individual)                                 N2million                    N10 million

C)   Market Infrastructure:

Central Counter Party (CCP)                                      N5billion                     N10 billion

Clearing and Settlement Company (CSC)                  N200 million               N5 billion

Composite Securities Exchange

· Trading and Listing of all types of securities.

N500 million   N10 billion

Non-Composite Securities Exchange

· Focus on a single type of security, commodity or financial product.

N500million    N5 billion

Trade Repository                                                         N100 million   N150 million

D)   Consultants:

Capital Market

Consultant (Corporate)                                                N5million        N25million

Capital Market

Consultant (Individual)                                               N500,000        N2 million

Capital Market

Consultant (Partnership)                                              N2 million       N10 million

E)   Fintechs:

Robo Adviser                                                              N10 million     N100 million

Crowd Funding Intermediary                                      N100 million   N200million

F)   Virtual Asset Service Providers:

Ancillary Virtual Assets Service Providers (AVASPs)           N/A     N300 million

Digital Assets Offering Platform (DAOP)                             N500million    N1 billion

Digital Assets Intermediary (DAI)                                         N/A                 N500 million

Digital Assets Platform Operator (DAPO) (including Token issuers) N/A  N500million

Real-world Assets Tokenisation and Offering Platform (RATOP) N/A   N1billion

Digital Assets Exchange (DAX)                                N500 million               N2 billion

Digital Assets Custodian                                             N500 million               N2 billion.

G)  Commodity Market Intermediaries:    

Collateral Management Company (CMC):

Tier 1 – Local/ Regional Operations                                       N50 million     N200 million

Tier 2 – National/International reach                                      N50 million     N500 million

Commodities Broker/Dealer                                                   N10 million     N50 million

Commodities Broker                                                               N7 million       N30 million

Commodities Dealer                                                               N3 million       N20 million

Warehousing Operators                                                           N50 million     N500 million

H)   Other Entities                

Custodian of Securities (Bank)           N200 million   as prescribed by the CBN

Non-Bank Custodian  –           N50 billion + 0.1 percent of AUC

Dealing Member

Banks  N200 million   as prescribed by the CBN

Nominee Company     0.001 million   N5 million

Receiving Banker (Banker to an Issue) N200 million            N/A