Nigeria’s T+2 Settlement Cycle: Faster Trading to Boost Liquidity

 

In a major move to modernize its financial infrastructure, the Nigerian capital market is officially transitioning from a T+3 (Trade Date plus three days) to a T+2 (Trade Date plus two days) settlement cycle for equities transactions, effective November 28, 2025. This transition, spearheaded by the Securities and Exchange Commission (SEC) and backed by the Central Securities Clearing System (CSCS), is a strategic imperative designed to enhance market efficiency, attract foreign investment, and align Nigeria with global financial standards.

What T+2 Means for Investors

The settlement cycle refers to the time it takes for a securities trade to be completed—meaning the buyer receives the shares and the seller receives the cash.

Under the new T+2 regime:

  Quicker Access to Funds: Investors who sell their shares will receive their cash proceeds one business day faster. This allows for quicker access to capital, enabling faster reinvestment and promoting overall market activity and liquidity.

  Reduced Risk: Shortening the time between trade execution and final settlement significantly reduces counterparty risk (the risk that one party fails to meet its obligation) and market exposure to price fluctuations.

  Alignment with Global Best Practice: Most major financial markets across Europe, Asia, and the Americas already operate on a T+2 or even faster cycle (like T+1), making Nigeria’s market more competitive and attractive to international investors.

Key Benefits of the Transition

The shift to T+2 is more than just an operational change; it is expected to bring several structural advantages to the Nigerian Exchange (NGX):

  Enhanced Market Liquidity: By freeing up capital one day sooner, investors are encouraged to participate more actively, driving trading volume and market depth.

  Improved Investor Confidence: A more efficient and secure settlement system fosters greater trust and confidence among both domestic and international investors.

  Future-Ready Infrastructure: This transition is seen as a key step toward the potential implementation of an even faster T+1 settlement cycle in the future, securing Nigeria's position as a robust financial hub.

You can find more details about how the new two-day settlement policy will affect investors and the Nigerian Exchange in this clip: New Market Era What T+2 Settlement Cycle Means For You.