CSCS transitions to T+2 settlement cycle

The Central Securities Clearing System has officially moved to a T+2 settlement cycle, marking a major advancement in Nigeria’s capital market and aligning the country with global settlement standards adopted by leading financial markets. The transition represents a significant step in reducing settlement delays, improving liquidity, strengthening market efficiency, and attracting more institutional investors who rely on faster and more predictable settlement timelines. With this move, transactions executed on the Nigerian Exchange and other participating platforms will now be completed within two business days after the trade date.

The CSCS explained that the migration from the previous settlement framework to a T+2 window is part of its broader strategy to modernise the post-trade environment and enhance the competitiveness of the Nigerian market. Market operators have long advocated for a shortened cycle, noting that it reduces counterparty risk, boosts confidence among foreign portfolio investors, and positions the country more favourably in relation to international benchmarks. Many global markets, including those in Europe, Asia, and North America, have adopted T+2, with some now exploring T+1. The CSCS stated that aligning with the T+2 model was crucial for deepening market participation and facilitating smoother cross-border transactions.

The new cycle is expected to strengthen risk management across the financial ecosystem. Under T+2, both buyers and sellers face shorter exposure periods, reducing the likelihood of transaction defaults, price swings affecting settlement, or delays caused by operational bottlenecks. The system upgrade accompanying the transition also includes enhanced automation features designed to minimise manual processes and improve transaction accuracy. The CSCS noted that these improvements will support brokers, custodians, asset managers, issuing houses, and other stakeholders in meeting their settlement obligations within the shortened timeframe.

To ensure a seamless transition, the CSCS conducted extensive consultations with market operators, regulators, and other participants in the months leading to the launch. The organisation provided detailed operational guidelines, technical support sessions, and simulation exercises to help stakeholders test their systems and adjust their processes. Many operators acknowledged that the preparatory work gave them adequate time to adapt and understand their new responsibilities under the updated cycle. The CSCS added that the goal was to guarantee full readiness across the market because the success of a shortened settlement cycle depends on coordinated action by all participants.

Market experts believe the shift will accelerate the clearing and settlement of equities, bonds, and other eligible instruments processed through the CSCS. They argue that a T+2 cycle supports price discovery, improves liquidity turnover, and increases the attractiveness of the market to global funds that prioritise efficient settlement frameworks. Analysts also predict that the transition may pave the way for even shorter cycles in the future, especially as digital transformation continues to shape the Nigerian financial system. Although T+1 is now being adopted in some advanced markets, experts note that Nigeria’s current move is a critical step toward building a more resilient foundation.

Investors have responded positively to the development, stating that faster settlement will free up capital more quickly, reduce administrative burdens, and shorten waiting periods associated with trade completion. Retail investors, in particular, stand to benefit from improved access to their funds and faster portfolio adjustments. Fund managers and institutional investors also welcomed the reform, noting that it enhances operational efficiency and reduces the risk of prolonged exposure during volatile market periods.

The Nigeria Exchange Group and other regulatory stakeholders expressed support for the CSCS initiative, describing it as timely and consistent with broader reforms aimed at deepening the Nigerian capital market. They noted that the shortened cycle complements ongoing efforts to boost transparency, strengthen corporate governance, digitalise processes, and enhance regulatory compliance. The shift is also expected to support Nigeria’s rating in global market indices, which often assess settlement efficiency when determining a market’s suitability for foreign investment flows.

Despite the overall positive outlook, some market observers acknowledge that challenges may arise as participants adjust to the new settlement requirements. Smaller brokerage firms and operators with manual or outdated systems may initially face pressure to meet the T+2 deadline. However, the CSCS assured that it will continue offering technical support and monitoring to help operators navigate the learning curve. Industry groups also called on firms to upgrade their internal technologies, improve coordination with custodians, and strengthen trade confirmation processes to ensure timely settlement.

The CSCS emphasised that the transition demonstrates its commitment to modernising Nigeria’s post-trade infrastructure and sustaining market confidence. The organisation added that the successful migration is the result of collaboration across the financial ecosystem and reflects a shared vision of positioning Nigeria as a leading investment destination on the continent. As the market adapts to the new cycle, the CSCS said it will continue evaluating system performance, identifying improvement areas, and implementing additional upgrades that support market growth.

With the T+2 settlement cycle now fully operational, Nigeria’s capital market enters a new phase characterised by faster transactions, improved operational resilience, and enhanced alignment with global standards. The change is expected to influence trading strategies, reshape settlement dynamics, and support the long-term goal of building a deeper, more efficient, and globally competitive financial system.