SEC Targets Near-Zero Trade Fails in T+1 Settlement, Eyes Foreign Investor Confidence
The Securities and Exchange Commission (SEC) is setting its sights on achieving a sustained near-zero trade fail rate within the T+1 settlement cycle for the latter half of 2026. This strategic objective, articulated by SEC Director-General Dr. Emomotimi Agama, underscores a commitment to enhancing market efficiency and bolstering investor confidence, particularly among foreign portfolio investors.
The focus of this initiative will be on enforcing rigorous delivery-versus-payment discipline across custodians, brokers, and the Central Securities Clearing System Plc (CSCS). Early indications from the T+1 settlement cycle, which commenced in June, have been encouraging, with the Commission aiming to demonstrate at least a full quarter of clean settlement data. A critical element of this strategy involves ensuring foreign investors can complete currency conversions and funding within the compressed settlement period without being compelled into pre-funding arrangements.
To facilitate this, the SEC is collaborating closely with the Central Bank of Nigeria (CBN), custodians, and settlement banks to enable same-day Foreign Exchange (Forex) execution and confirmation for portfolio flows. Furthermore, the Commission is actively pursuing the full digitisation, timeliness, and predictability of the Certificate of Capital Importation (CCI) process to ensure seamless market entry and exit. The SEC has formally engaged the CBN on modernising the CCI regime to align it with the realities of the T+1 settlement cycle.
Addressing FTSE Russell’s decision to observe the market during this transition, Dr. Agama clarified that this is a standard index governance practice for significant structural market changes. The index provider’s role is to verify the practical efficacy of the shortened settlement cycle, especially for foreign portfolio investors.
Looking ahead to the second half of 2026, the SEC anticipates a more selective but constructive market environment for equities, fixed income, and alternative investments. Following a substantial first-half advance, some consolidation is deemed natural and healthy. Key drivers for this outlook include the deployment of fresh capital by recapitalised banks, a robust pipeline of new listings, improving foreign participation, and resilient half-year earnings. The fixed income landscape is expected to remain rewarding, with continued disinflation and elevated yields offering positive real returns across much of the yield curve, alongside vibrant sovereign, sub-national, and corporate issuance, including infrastructure and green instruments.
The SEC also highlighted ongoing market reforms, including the Investments and Securities Act (ISA) 2025, which modernises the legal framework, incorporates digital assets, and strengthens enforcement powers. These reforms aim to outlaw Ponzi schemes with severe sanctions and provide a more robust investor protection framework. Further initiatives before year-end include the implementation of the Capital Market Liquidity Roadmap, the rollout of market operator recapitalisation, deepened sustainability and ESG disclosure standards, enhanced RegTech-driven supervision, and the expansion of regulated digital asset admissions. The Commission reiterated its commitment to transparency, firm enforcement of disclosure standards, and sanctioning market abuse, ensuring investor funds are protected by a functioning rulebook.
