Three companies now control nearly 70% of Nigeria’s ISP market

Central Securities Clearing System Plc (CSCS) has expressed delight over FTSE Russell's decision to reclassify Nigeria from Unclassified to Frontier Market status, starting from September 21, 2026. This announcement was made in a statement released on Thursday, August 27, 2026. The clearing house highlighted that this move boosts confidence in Nigeria's T+1 settlement framework and highlights the ongoing progress of capital market reforms.

CSCS sees the reclassification as a crucial milestone for Nigeria's capital market, reflecting the reforms aimed at improving efficiency, resilience, and alignment with global market standards.

The review allowed Nigeria's capital market stakeholders to demonstrate that the shift to T+1 settlement can function effectively for both local and international investors. It also reaffirmed that the transition can uphold the fundamental protections ensured by the market's Delivery versus Payment (DvP) settlement framework.

Nigeria moved from T+2 to T+1 settlement on June 1, 2026, as part of a broader initiative to modernize the post-trade environment, minimize settlement exposure, and enhance the competitiveness of the Nigerian capital market. CSCS clarified that concerns arose about whether international institutional investors would meet the shorter settlement timeline and whether the new cycle could effectively necessitate foreign portfolio investors to prefund transactions.

Engagements among the Securities and Exchange Commission (SEC), CSCS, market operators, custodians, and other stakeholders confirmed that foreign portfolio investors are not obligated to prefund transactions.

FTSE Russell had paused its planned reclassification of Nigeria back to Frontier Market status in June 2026, placing the country under further review. The SEC had stated that FTSE Russell would provide a definitive update on Nigeria's potential return to the Frontier Market Index by the end of August 2026. Nigeria was initially upgraded from "Unclassified" to "Frontier Market" status during the March 2026 interim review, with implementation slated for September 2026.

CSCS emphasized that the market has introduced several operational improvements to support the shortened settlement cycle, such as enhanced automation of trade notifications, advanced post-trade processes, strengthened risk-management procedures, and improved coordination among brokers, custodians, and settlement banks.

Shehu Shantali, Managing Director/Chief Executive Officer of CSCS Plc, commented on the development, stating that the decision validates Nigeria's capital market infrastructure's resilience and the collective efforts made to achieve the T+1 transition. He noted that the significance of this development extends beyond Nigeria's reclassification to Frontier Market status, pointing out that the review demonstrated the market's capacity to undertake significant structural reforms while responding to international investors' requirements and maintaining settlement framework integrity.

Shantali elaborated that T+1 is about more than just settling transactions a day earlier; it's about creating a more efficient, resilient, and globally competitive market. It reduces settlement exposure and develops infrastructure capable of supporting increased participation from both domestic and international investors. The approval by FTSE Russell to proceed with the reclassification now further supports Nigeria's endeavors to strengthen its capital market infrastructure and align its operations with global standards.