FTSE Russell review not setback for Nigeria – CIS

The Chartered Institute of Stockbrokers (CIS) has characterized FTSE Russell's decision to postpone Nigeria's reclassification to Frontier Market status as a temporary review, emphasizing that it does not signify a setback for the country's capital market reforms. The institute highlighted that Nigeria's adoption of a T+1 settlement cycle remains a significant achievement poised to bolster investor confidence and market efficiency.

FTSE Russell announced the postponement on June 30, 2026, stating it needed to further assess the practical implications of Nigeria's transition from a T+2 to a T+1 securities settlement cycle for international institutional investors. The CIS noted that Nigeria's move to the T+1 framework on June 1, 2026, is one of the most crucial reforms in its capital market history, making it the first African market to implement such a shortened settlement period. This aligns Nigeria with major global markets that have adopted faster settlement systems to enhance operational efficiency, reduce risk, and improve liquidity.

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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 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 CIS stated. The institute addressed FTSE Russell's concerns, explaining they centered on whether the T+1 cycle could create a de facto prefunded market for foreign institutional investors operating across different jurisdictions and time zones. However, the CIS maintained that Nigeria's settlement model still operates under Delivery versus Payment (DvP) principles, ensuring simultaneous exchange of securities and cash. The T+1 implementation does not mandate prefunding for foreign portfolio investors.

The CIS acknowledged the operational challenges associated with the shortened settlement cycle and stressed the need for sustained engagement with stakeholders to refine reforms and address emerging issues. "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," the institute said. The CIS views the concerns over prefunding as operational matters requiring further clarification, rather than indicators of structural weaknesses in Nigeria's capital market.

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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.