SEC Establishes 5 PM Cut-Off for T+1 Settlement Cycle

The Securities and Exchange Commission (SEC) has set a 5:00 p.m. deadline on the first business day after a transaction (T+1) for the settlement of equities and commodities traded through the Central Securities Clearing System (CSCS). This directive, issued in a circular to capital market operators on Wednesday, mandates that all transactions must be fully paid by the specified time to comply with the Delivery versus Payment (DvP) settlement procedure.

This change follows Nigeria's transition from a T+2 to a T+1 settlement cycle, which requires eligible securities transactions to be settled one business day after the trade date. The SEC warned that brokers/dealers with inadequately funded accounts will face consequences per the CSCS Default Management Procedure.

The circular also clarifies that foreign portfolio investors do not need to prefund their accounts, but operators must ensure trades are funded timely. This transition aims to improve settlement efficiency, reduce counterparty risk, and enhance liquidity in Nigeria's capital market, aligning it closer to international standards.