Securities Commission Raises Capital Base For Market Operators, Sets June 2027 Deadline For Compliance

The Securities and Exchange Commission (SEC) has overhauled minimum capital requirements for all regulated capital market entities, marking the first major review in 10 years.

The revision addresses the need to “strengthen market resilience, enhance investor protection, align capital adequacy with the evolving risk profile of market activities, and ensure that regulated entities possess sufficient financial capacity to discharge their obligations in a sustainable manner,” the Commission stated in a January 16 circular to operators.

In the circular dispatched to core and non-core operators, market infrastructure providers, consultants, FinTech firms, Virtual Asset Service Providers (VASPs), and commodity intermediaries, SEC outlined the framework’s goals.

“The revised Minimum Capital framework seeks to: enhance the financial soundness and operational resilience of market operators; align capital requirements with the scope, complexity, and risk exposure of regulated activities; promote market stability and systemic risk mitigation; and support innovation and orderly development of new market segments, including digital assets and commodities markets,” the Commission stated.

All entities must meet the new thresholds by June 30, 2027,  SEC warned, adding that “entities that fail to meet the prescribed requirements within the stipulated timeline shall be subject to appropriate regulatory sanctions, including suspension or withdrawal of registration, as may be determined by the Commission.”

Following the review,  Tier-1 Portfolio Managers managing Collective Investment Schemes (CIS), Alternative Investment Funds (private equity, venture capital, infrastructure) above N20 billion NAV, or discretionary/non-discretionary private portfolio services above N20 billion AuM, or with up to 40 per cent foreign instrument exposure, now face a N5 billion minimum—up from N150 million.

SEC also specified that “any Fund and Portfolio Manager with NAV/AuM of more than N100 billion should have a minimum of 10 per cent of the NAV/AuM as capital”

Tier-2 Portfolio Managers (limited scope: CIS up to N20 billion NAV or 10 times capital, private services up to N20 billion AuM, or 20 per cent foreign exposure) require N2 billion, also from N150 million.Broker-dealers providing client execution, proprietary trading, margin/securities lending, and advisory services must capitalise at N2 billion, raised from N300 million. Capital base for Issuing Houses Tier-1 (non-interest finance, advisory/arrangement without underwriting) jumped to N2 billion from N200 million; while Tier-2 (underwriting, full ‘one-stop-shop’ services) to went N7 billion from N200 million.

Further increases hit brokers (execution only) from N200 million to N600 million; dealers (proprietary trading) from N100 million to N1 billion; sub-brokers (digital) from N10 million to N100 million; sub-brokers (corporate) from N10 million to N50 million; sub-brokers (individual) from N2 million to N10 million; and inter-dealer brokers from N50 million to N2 billion.

The commission tied the 2015 baseline update to its powers under the Investments and Securities Act 2025 “to regulate and develop the Nigerian capital market.”

Industry observers hailed the moves as timely amid Nigeria’s push for deeper capital markets and digital innovation, but flagged potential consolidation risks.

The hikes—some exceeding 30-fold—could squeeze smaller operators, prompting mergers or exits, while fortifying larger firms against shocks like forex volatility or cyber threats in FinTech/VASP spaces.

“By jacking requirements to levels like N5 billion for high-exposure portfolio managers, SEC is signaling zero tolerance for undercapitalised players in a market now eyeing N100 billion+ funds,” one analyst noted, echoing SEC’s risk-aligned rationale.

Firms with N150 million capital today must source billions within 18 months, amid high lending rates and naira pressures. Non-compliance threats could disrupt intermediation, raising transaction costs for retail investors.