Operators Decry Securities Commission’s New Capital Requirements

Nigeria’s capital market operators have decried the Securities and Exchange Commission’s (SEC) new capital hike, describing it as the “highest in the world” and warning that it risks wiping out brokers.

The SEC’s revised requirements substantially raise capital thresholds across operator categories, including stockbrokers, fund managers and digital asset platforms, with compliance due by 30 June 2027.

As of 18 January 2026, there were 803 registered capital market operators with the SEC, including 183 active stockbrokers on the NGX, with 60 per cent (109 houses) functioning as broker-dealers. The new minimum capital requirement for broker-dealers is N2 billion, up from previous levels.

Under the revised requirements, the SEC has raised minimum capital thresholds, with broker-dealers now required to have N2 billion, brokers N600 million and dealers N1 billion.

Sub-brokers have also been affected, with digital sub-brokers required to maintain N100 million in capital and corporate sub-brokers N50 million, up from N10 million each previously.

In a notable development, the SEC introduced explicit minimum capital thresholds for Virtual Asset Service Providers (VASPs), reflecting the regulator’s push to bring digital asset activities firmly within the regulatory perimeter. Digital Asset Exchanges will now be required to maintain N2 billion in capital, up from N500 million, while Digital Asset Custodians will also be subject to a N2 billion threshold.

Other categories, including Digital Asset Offering Platforms, Digital Asset Intermediaries, and Real-World Assets Tokenisation and Offering Platforms, will be required to hold between N500 million and N1 billion, depending on the scope of their operations. Ancillary Virtual Asset Service Providers will be required to maintain a minimum of N300 million.

For fintech operators, minimum capital for robo-advisers has been increased from N10 million to N100 million, while crowdfunding intermediaries will now be required to hold N200 million, up from N100 million.

The revised framework also significantly raises capital requirements for fund and portfolio managers. Full-scope portfolio managers handling collective investment schemes and alternative investment funds with large assets under management will now require a minimum capital of N5 billion, compared with N150 million previously. Limited-scope managers will be required to hold N2 billion, while private equity and venture capital fund managers will now need N500 million and N200 million respectively.

Composite securities exchanges will now require N10 billion in capital, while non-composite exchanges will need N5 billion. The minimum capital for a Central Counterparty has been raised to N10 billion, and Clearing and Settlement Companies will now require N5 billion. The SEC has given affected entities until 30 June 2027 to comply with the revised requirements.

Brokers offering client execution now need N600 million (up from N200 million), proprietary dealers N1 billion (a tenfold increase), and broker-dealers effectively N2 billion. Full-scope portfolio managers face N5 billion (from N150 million), while composite exchanges require N10 billion; digital asset and ancillary services range from N300 million to N2 billion.

The SEC’s push for increased capitalisation has elicited mixed reactions, as operators expressed confidence in some firms meeting the new requirements, while many others warned of significant challenges and raised concerns about wiping out brokers.

Vice-President of Highcap Securities, David Adonri, decried the unprecedented scale, adding that the capital requirements are extraordinarily high, potentially the highest in the world, and present significant challenges for market participants.

Adonri explained that raising this capital from the economy is likely to be a formidable task, particularly due to intense competition in the primary market for capital. He pointed out that “banks have withdrawn substantial amounts of capital from the economy, insurance companies are also diverting significant resources, and several real sector companies are competing for the same pool of funds.”

“The proposed capital requirement for a broker-dealer in Nigeria stands at N2 billion, while in India — a much larger economy — the minimum is approximately N90 million. In the European Union, it equates to about N210 million, and in the United States, around $250,000 — making Nigeria’s 400 per cent higher than the US and nearly 1,000 per cent above Europe,” he said.

He warned of dire consequences, noting that the resulting capital shortage could lead to a reduction in the number of operational stockbroking firms.

Adonri also flagged SEC rules barring retained earnings, saying: “Retained earnings will not qualify as part of the fresh capital injection required for mergers and acquisitions. Typically, such combinations rely on aggregating existing assets, including fixed assets and retained earnings — this stipulation adds another layer of complexity.”

He added that “the situation is evolving, and industry stakeholders are awaiting further developments, particularly concerning the SEC’s engagement with stockbrokers and dealers on this pressing issue.”

However, the Managing Director and Chief Executive Officer of APT Securities and Funds Limited, Garba Kurfi, expressed confidence in the ability of most stakeholders to comply with the upcoming regulatory requirements.

He emphasised that many trade associations have received communication from the Securities and Exchange Commission advocating increased capitalisation across the industry. Kurfi noted that all financial sectors, including insurance, banking and pensions, have successfully navigated similar adjustments, implying that the brokerage sector should follow suit.

He stated, “we must do it to enhance their capital structures,” adding that the measures being implemented are reasonable.

Kurfi said broker-dealers have been provided with sufficient provisions and ample time — specifically an 18-month period — to meet the new standards, describing the duration as adequate for compliance.

Addressing concerns about the ability of private stockbrokers to meet capitalisation requirements, Kurfi clarified that most broker-dealers are well positioned to comply. He noted that “the sector has already undergone significant changes through demutualisation, which resulted in most brokers acquiring more than six million shares of the Nigerian Exchange Group (NGX). With the current valuation of NGX at approximately N85.00 per share, this equates to a market capitalisation impact of around N500 million for those firms.”

Kurfi also mentioned that fund managers are categorised into tiers, allowing flexibility for those who may struggle to meet higher thresholds. He encouraged them to consider tier two, which requires a minimum of N2 billion, asserting that this figure is attainable given that many fund managers are already handling billions of naira in assets.

He underscored the importance of adequate capitalisation, reflecting on industry growth: “In 2015, the total capitalisation of the market was less than N10 trillion; today, it has surged to over N100 trillion.” He questioned how firms could efficiently manage such growth without sufficient capital.

The Managing Director and Chief Executive Officer of Globalview Capital Limited, Aruna Kebira, stated that “we have up to 20 June 2027 to comply. Some companies will need to exceed a capital threshold of N2 billion, while others may find it challenging to reach this benchmark.”

Kebira noted that many brokerage firms are not publicly listed, affecting their ability to raise capital through conventional methods, as capital raising will predominantly occur through private placements.

“They cannot opt for public offerings or rights issues due to their unlisted status, making private placements the viable route. Each stockbroker will need to actively seek investors, including individual and institutional investors, as well as increased capital contributions from foreign shareholders, to meet the N2 billion target,” he explained.

He added that the demutualisation of the stock exchange gave each brokerage firm an allocation of six million units of the Nigerian Exchange Group, which alone represents a significant capital inflow to stockbroking houses.

Kebira said the increased capitalisation may lead to shifts in market participation, with some firms possibly facing downgrading options — for instance, transitioning from broker-dealers to brokers or dealers, or from full brokers to sub-brokers.

Despite these views, operators continue to await further engagement with the SEC amid fears of industry contraction.