CSCS, NGX Move to T+2 Settlement Cycle to Boost Market Efficiency

The Central Securities Clearing System (CSCS) and the Nigerian Exchange Group (NGX) have officially announced the transition of the Nigerian capital market to a T+2 settlement cycle, reducing the period for completing securities transactions from three business days to two. The move, which aligns Nigeria with leading global markets, is expected to improve liquidity, attract foreign investment, and strengthen investor confidence in Africa’s largest economy.

According to the joint statement released in Lagos, the adjustment from the previous T+3 cycle to T+2 will take effect immediately, marking a major milestone in the evolution of the Nigerian capital market. The shift means that once a trade is executed on the NGX, settlement — the official transfer of securities from seller to buyer in exchange for payment — will be completed within two business days, thereby reducing settlement risk and enhancing market efficiency.

Oscar Onyema, Group Chief Executive Officer of the NGX Group, described the transition as a landmark reform that underscores the Exchange’s commitment to innovation and global best practices. He explained that the Nigerian capital market had operated on a T+3 basis for many years, which often left investors exposed to higher counterparty risk and reduced liquidity. By shortening the cycle to T+2, he said, the market would not only become more competitive globally but also more attractive to foreign portfolio investors seeking faster access to their funds.

For its part, the CSCS, which serves as Nigeria’s central securities depository, noted that the success of the transition is underpinned by years of investment in robust clearing and settlement infrastructure. The Managing Director/CEO of CSCS, Haruna Jalo-Waziri, said the institution has been modernising its technology platforms to support faster and safer settlement. He stressed that the T+2 migration is fully in line with international securities settlement standards and demonstrates Nigeria’s readiness to compete with more advanced markets in Africa, Asia, and Europe.

Industry experts have welcomed the development, pointing out that global financial centres such as the United States, United Kingdom, and most European Union markets already operate on a T+2 cycle. Some are even preparing to migrate to T+1 within the next few years. Nigeria’s move to T+2 is therefore seen as a crucial step toward maintaining relevance in an increasingly interconnected global financial system. Analysts argue that for Nigeria to attract more international investors, it must demonstrate that its markets are safe, efficient, and comparable in structure to those abroad.

Market operators also believe the reform will help reduce systemic risk in Nigeria’s capital markets. Under the previous T+3 system, investors and brokers were required to wait three days before transactions were finalised, a lag that sometimes created liquidity pressures and heightened the possibility of settlement defaults. With the new T+2 cycle, trades will be settled faster, enabling quicker access to funds and securities. This improvement is expected to particularly benefit retail investors, institutional players, and foreign portfolio managers who value speed and certainty.

At the same time, regulators have assured stakeholders that necessary safeguards have been put in place to ensure the transition proceeds smoothly. The Securities and Exchange Commission (SEC) confirmed that it had worked closely with both NGX and CSCS in the months leading up to the migration to address technical issues and provide guidelines for brokers, dealers, and other capital market participants. The SEC emphasised that the reform fits within the broader goal of modernising Nigeria’s financial market infrastructure and aligning it with the country’s economic diversification agenda.

However, some stakeholders have cautioned that the success of the T+2 system will depend on continued investment in technology and market infrastructure. They argue that issues such as delayed payments, weak internet connectivity, and operational inefficiencies in some brokerage firms could undermine the gains of the reform if not addressed promptly. To this end, both CSCS and NGX have pledged to continue providing training and support to market participants to ensure seamless adoption of the new system.

Beyond technical considerations, the reform also carries symbolic significance. It demonstrates the resilience of Nigeria’s financial institutions at a time when the broader economy faces challenges from inflation, currency volatility, and global market uncertainty. By modernising its capital market settlement framework, Nigeria is sending a signal that it is serious about financial stability and investor protection.

Looking ahead, analysts suggest that Nigeria could eventually follow the global trend toward a T+1 cycle, where trades are settled within just one business day. Such a shift would require even more sophisticated infrastructure, tighter coordination among market players, and stronger risk management systems. For now, though, the T+2 migration is seen as a bold and necessary step in boosting Nigeria’s appeal to investors, both domestic and foreign.

The move by CSCS and NGX represents more than just a technical adjustment; it is a strategic effort to strengthen the foundations of Nigeria’s capital market. With faster settlement times, reduced risk, and improved liquidity, stakeholders are optimistic that the reform will deepen participation in the market and enhance its role as a driver of economic growth.

At a time when Nigeria is seeking to attract foreign direct investment, diversify revenue sources, and restore investor confidence, the adoption of the T+2 settlement cycle offers a strong signal of progress. For millions of investors at home and abroad, the change promises a more efficient, reliable, and globally competitive Nigerian capital market.