When the Executive Commissioner, Operations of the Securities and Exchange Commission, Bola Ajomale, took the podium at the press conference to mark the transition to the T+2 settlement cycle of Nigeria’s capital market on Friday, he didn’t go straight into either his speech or the message from the Director-General of the SEC, Dr Emomotimi Agama, whom he was representing; he shared insights into his days as a “floor warrior” (read stockbroker), when settlement of trade took weeks and getting a certificate for 100 units of a stock could take up to a year.
“At that time, when we were floor warriors, we used to settle on Fridays; it was two weeks after. So, if you trade on a Monday, the person who is supposed to pay will not come in until two weeks later on a Friday, and then, God help you, that person gives you an upcountry cheque. So, it used to count. Then, after you’ve done the trade, you take the security, go back to your office, lodge it eventually, and wait for the registrar. It takes almost a year sometimes before you get the certificate for 100 units of Nestlé. It was a very interesting time,” he narrated to highlight how far the market had come to a point where it was now transitioning to a T+2 settlement cycle and a date for a T+1 transition in sight in the coming year.
A fellow floor warrior was the Managing Director/Chief Executive Officer of Central Securities Clearing System Plc, Haruna Jalo-Waziri, who shared how the vision of a T+2 settlement period came into manifestation.
What is a settlement cycle?
According to HSBC, the settlement cycle is defined as the time between a securities transaction being traded and when the transaction is settled. A transaction is settled when either the payment for the purchase of assets is made or when the payment for the sale of assets is received. The cycle is typically denoted as T+X, where “T” is the trade date and “X” is the number of business days until settlement.
Until recently, the majority of global markets were aligned to a settlement cycle of two days (T+2), mainly for capital markets. We are now seeing a trend from financial markets around the world to move towards shortened standard settlement cycles. The benefits of reducing the time between trade execution and settlement for investors and market participants include reduced costs, increased market efficiency and reduced credit, counterparty, and settlement risk, particularly during periods of high volume and volatility.
The US and Canadian markets are on a T+1 settlement cycle, but the United Kingdom and the rest of Europe are targeting 11 October 2027, to make that transition. On the African continent, Nigeria has moved to T+2, and the BRVM, which serves eight West African countries, is set to move to the same cycle in December 2025. The Johannesburg Stock Exchange still runs the T+3 settlement day for equities and bonds.
Technology and cost
To achieve a transition of this scale, the MD/CEO of CSCS disclosed that certain tech solutions were improved and that the company had managed to keep its costs down.
Jalo-Waziri said, “This transition is supported by major technology upgrades, including the IBM Power 10 series. We completed a complex system upgrade over a single weekend without the market noticing. It was seamless, and I thank my colleagues for that. The benefits to the market are clear: improved liquidity, faster settlement, reduced counterparty risk, and greater investor confidence. Even those who initially debated the merits of T+2 have become strong advocates.”
On the cost implication, he said, “That is less than four per cent of our revenues last year. Typically, when companies grow this fast, they spend between 18 per cent and 25 per cent on such components. We are doing less than 4–5 per cent. The cost is minimal. Why? Because over the years, we have invested almost every year. When I talk about depreciation, it is a one-off investment.
You don’t have to recycle. The last time we did an upgrade was in 2017. You can imagine that the next cycle can be between five and ten years; we’ve done nothing in seven or eight years.
“So the cost is minimal. People ask me everywhere about the cost, it is very low because we have deliberately planned and scaled up gradually. If you spread three to four per cent of revenues over six or seven years, it is quite reasonable. So, cost should not be a concern.
Impact on investors and the capital market
The Chairman of CSCS and GMD/CEO Temi Popoola, in his welcome address, highlighted the impact of the T+2 settlement cycle transition on the market.
He said, “Today’s milestone transcends the technical adjustment of shortening timelines. It represents a deliberate step toward strengthening investor confidence, deepening liquidity, reducing risk, and firmly positioning our market within the standards that define world-class financial systems. The transition to T+2 is not merely an operational achievement, it is a strategic signal. A signal that affirms Nigeria’s commitment to building a market anchored on efficiency, transparency, and global competitiveness. In a world where investors demand speed, reliability, and predictability, this achievement reflects our readiness to meet and exceed those expectations. It declares that the Nigerian capital market is prepared to compete and to thrive in an increasingly interconnected global landscape.
“Yet as significant as today is, it is only the beginning of a broader evolution. The adoption of T+2 lays the groundwork for new opportunities aligned with the president’s agenda for a $1tn economy. Achieving this requires deepening foreign investor participation, accelerating post-trade efficiency to support more sophisticated products, and enhancing risk management across the board. It strengthens the integrity of our market infrastructure and aligns Nigeria with jurisdictions that have long adopted faster settlement cycles. Globally, markets are moving toward T+1 and exploring advanced systems across asset classes. This transition positions Nigeria to participate effectively in the next generation of capital market innovation.”
Jalo-Waziri affirmed, “This transition strengthens competitiveness and enhances investor confidence. As the Chairman of CSCS said, eventually, when we get to T+1 and T+0, younger generations will more easily participate. I often tell the story of my son: when I ask why he isn’t investing in the market, he says, ‘If I buy something on Amazon in the morning, it arrives in the afternoon, and if I don’t like it, I return it, and my money is refunded quickly. But in the capital market, I wait three days to buy and three days to sell; that’s six days before anything happens. When you’re ready, let me know.’ So whenever we hit a milestone, I take a picture and tell him, ‘We’re getting closer.’”
The CSCS boss added that all stakeholders in the capital market had been engaged to arrive at the transition.
“Today marks a defining milestone in the Nigerian market’s transition from T+3 to T+2. There is no technical presentation because we’ve done extensive engagements across various stakeholder groups. This session is more of a reflection and discussion. This milestone reflects the collective commitment of our regulators (thank you, SEC) and our exchanges, particularly the NGX, which worked closely with us. It reflects the commitment of operators and the entire ecosystem.
“We included them in the testing. We examined issues, identified process changes, assessed risks, and even simulated outcomes. Processes and some policies were adjusted. Our systems are already robust. A dispute-resolution mechanism exists, signed by all parties, brokers, settlement banks, and custodians.”
He added that CSCS’s readiness required significant investments, which were supported by its board, which consistently asked for clarity, returns, and impact. I appreciate their commitment.
On risk management, he said shortening settlement cycles strengthened the company’s risk framework.
“We have worked closely with settlement banks and custodians to ensure smooth operations. Market integrity remains a top priority. Our rating agency evaluates us rigorously; transitions like this must be flawless. Our post-trade processes are now 95 per cent automated. I recall a time when our office was full of investors and brokers daily. Today, the ecosystem operates seamlessly with far fewer physical interactions, a sign of the market’s evolution,” he said.
Ajomale, commenting on the changes for the investors, said, “We are moving in the direction the rest of the world is moving, the US, Canada, the EU, Singapore, everywhere, making transactions faster, more efficient, more secure, and more reliable. And we are moving in that direction. We are deepening our liquidity due to this fact. We are also aligning ourselves with the IOSCO principles, belonging to a body of about 150 jurisdictions. Not all of them are moving to T+3; not all are moving at the same time. By the time we make this announcement to IOSCO, I am sure they will come back to study the Nigerian situation.
“The market does not exist without investors and clients. We must send a clear signal to them about what they stand to gain: lower counterparty risk, greater liquidity, greater reliability, faster access to proceeds, and alignment with global settlement standards. To the general public, we send the message that Nigeria is committed to developing a credible ecosystem.”
Speaking to the impact of the transition on the volume and value of trades, Jalo-Waziri said, “Before we did this, the board of CSCS went to DTCC, I think two years ago, to understudy how DTCC was going to move from T+3 to T+2. DTCC is the biggest depository in the world. They do something like a quadrillion in trades a month. Let’s stay with what is consistent in every market that moved from T+3 to T+2 and from T+2 to T+1: liquidity typically drops for about three or four months, sometimes by 10 per cent, 20 per cent, or about five per cent. That’s because people are adjusting. After that, liquidity rises by seven per cent to 15 per cent in many markets, sometimes even higher.”
Outlook
Jalo-Waziri said, “Looking ahead, we will support market participants through this transition. We have set up support channels, system-testing environments, and readiness teams. A command-and-control centre will operate through the transition period to manage any issues in real time.
“For retail investors, T+2 means faster access to funds and a more efficient trading experience. And yes, while we are celebrating T+2, T+1 is on the horizon. With improvements in payment systems, central-bank collaboration, and infrastructure, Nigeria is well-positioned. If all goes well, T+1 could become a reality as early as May next year.”
Culled from The Punch