Stockbrokers Say FTSE Russell Review Not Setback, Backs Nigeria’s T+1 Reform

The Chartered Institute of Stockbrokers (CIS) has said FTSE Russell’s decision to defer Nigeria’s reclassification to Frontier Market status should not be viewed as a setback, insisting that the country’s newly adopted T+1 settlement cycle remains a landmark reform that will strengthen investor confidence and improve market efficiency.

In a statement issued on Thursday, the Institute described the June 30, 2026 decision by the global index provider as part of an ongoing review process aimed at assessing the practical implications of Nigeria’s migration from a T+2 to a T+1 securities settlement cycle for international institutional investors.

According to CIS, the postponement is a temporary evaluation exercise rather than a reversal of the reforms undertaken to modernise Nigeria’s capital market.

The Institute noted that Nigeria’s transition to the T+1 settlement framework, which took effect on June 1, 2026, represents one of the most significant reforms in the country’s capital market history, making Nigeria the first market in Africa to implement the shortened settlement cycle.

It said the move aligns Nigeria with leading global markets that have adopted faster settlement systems to reduce settlement risks, improve operational efficiency and enhance market liquidity.

CIS explained that FTSE Russell’s concerns focus on whether the shorter settlement period could effectively create a prefunded market for foreign institutional investors operating across different jurisdictions and time zones.

However, the Institute stressed that Nigeria’s migration to T+1 has not altered the country’s Delivery versus Payment (DvP) settlement model, under which securities and cash are exchanged simultaneously at settlement.

According to the Institute, concerns over prefunding should therefore be regarded as operational issues requiring further clarification rather than evidence of structural weaknesses in Nigeria’s capital market.

CIS said the review period provides regulators, market operators and other stakeholders with an opportunity to engage constructively with FTSE Russell, global custodians and international investors by demonstrating that Nigeria’s settlement infrastructure remains efficient, accessible and aligned with international best practices.

The Institute cited Pakistan’s experience as proof that a T+1 settlement cycle is compatible with Frontier Market classification. It noted that Pakistan adopted the T+1 framework earlier in 2026 while retaining its place in the FTSE Russell Frontier Market Index, showing that accelerated settlement does not conflict with Frontier Market status where appropriate operational safeguards are in place.

To strengthen Nigeria’s case, CIS urged capital market stakeholders to sustain ongoing reforms by improving foreign exchange accessibility, enhancing straight-through processing, strengthening cross-border settlement coordination and providing empirical evidence that foreign investors can settle transactions efficiently without compulsory prefunding.

The Institute added that Nigeria’s successful implementation of the T+1 settlement framework reinforces the country’s position as a leader in capital market innovation in Africa.

While acknowledging that the postponement delays Nigeria’s anticipated return to the FTSE Russell Frontier Market Index, CIS expressed confidence that the outstanding issues would be resolved before the review concludes.

“The current review should be seen as an opportunity to validate the resilience and efficiency of Nigeria’s capital market infrastructure. With continued collaboration among regulators, exchanges, custodians, brokers and international investors, Nigeria remains well positioned to secure its return to Frontier Market status and further strengthen its reputation as one of Africa’s most dynamic investment destinations,” the Institute stated.