SEC Launches Task Force to Overhaul Nigeria’s Capital Market

Nigeria’s Securities and Exchange Commission (SEC) has formed a multi-stakeholder working group comprising exchanges, custodians, fund managers, dealing members, and other market operators to address structural issues such as high transaction costs for institutional investors and concentrated trading in highly capitalised stocks, which leave the broader market shallow.

The group’s inauguration aims to boost market liquidity, following the Nigerian capital market’s strong growth since April 2024, when market capitalisation increased by 125 per cent from about N55 trillion to over N123.93 trillion.

At his inaugural address to the Capital Market Working Group on Market Liquidity in Lagos, the director general of the Securities and Exchange Commission (SEC), Emomotimi Agama, cited growth figures as proof of strong investor confidence and the Nigerian capital market’s resilience, emphasising that market size must be coupled with depth and liquidity.

Agama stated that the market’s contribution to the nation’s GDP has significantly increased from 13 per cent to 33 per cent, a rise of N68.83 trillion, highlighting the sector’s growing importance in economic development.

“Since this administration came into being in April 2024, we have seen market capitalisation grow from about N55 trillion to over N123.93 trillion. Our contribution to GDP has moved from 13 per cent to 33 per cent. These are impressive figures, but they tell only part of the story,” he said.

He emphasised that liquidity is critical for sustaining growth, as a deep and efficient market enables effective capital formation.

“A capital market is often described as the barometer of an economy’s health. But for that barometer to be accurate, the market must be more than just large—it must be liquid,” he said.

The new group is expected to develop practical recommendations to improve trading efficiency, deepen participation, and enhance price discovery, ensuring sufficient liquidity while allowing investors to exit positions without significant price distortions.

The group’s mandates include a thorough review of trading and settlement infrastructure, identification of technical and structural bottlenecks affecting transaction speed, and the proposal of solutions to make Nigeria’s settlement cycle more competitive with other emerging markets.

The group is also expected to recommend measures to broaden retail participation, with the SEC targeting the onboarding of up to 20 million new investors through digital platforms, dematerialisation of share certificates and fintech partnerships.