CAPITAL MARKET ON VERGE OF HISTORIC SHIFT

The CSCS Shift to T+1 settlement 

reflects the country’s commitment to aligning with global best practices, reckons SOLA ONI

Moving to a T+1 settlement cycle is beyond a technical upgrade. It is a chance to unlock faster liquidity, cut counterparty risks, and make capital work smarter. But speed comes with responsibility: markets and institutions must strengthen systems, fine-tune processes, and stay compliant to fully reap the benefits.

Nigeria’s capital market is on the verge of a historic milestone. On November 28, 2025, the Central Securities Clearing System (CSCS) PLC officially transitioned from a T+3 to a T+2 settlement cycle. While this might sound like a technical adjustment, it is a major step forward. The T+2 milestone is not the end of the story. The Clearing House is now preparing to implement T+1 settlement on May 29, 2026, a system where trades are settled the very next day. If successful, Nigeria will become the first African country to fully adopt T+1 for equities and general trades, surpassing countries like Tanzania and Zambia, which currently apply T+1 only to bonds.

The shift from T+3 to T+2, and now to T+1, is more than just a procedural change; it reflects the country’s commitment to aligning with global best practices in capital markets. For regulators, investors, and market operators, this move signals a readiness to modernize operations and reduce inefficiencies that have historically slowed market activity. Beyond technicalities, T+1 settlement carries strategic benefits that can strengthen Nigeria’s financial ecosystem.

One of the most obvious advantages is reduced counterparty risk. In a T+2 framework, market participants remain exposed for two business days before a transaction is fully settled. During that window, price volatility or unexpected disruptions can increase the risk of default. By shortening the settlement timeline to a single day, T+1 minimizes these exposures, making the market more stable and resilient.

Another significant advantage is improved capital efficiency. Faster settlement means that investors and brokers can redeploy funds more quickly. This speed allows capital to circulate through the market at a higher pace, supporting increased liquidity and more dynamic trading activity. Greater liquidity is crucial for any healthy capital market. It allows for more accurate price discovery, encourages broader participation from both domestic and international investors, and strengthens overall confidence in the system.

Beyond the mechanics of trading, T+1 settlement has implications for the broader economy. An efficient and credible capital market attracts investment, particularly from foreign portfolio investors who often consider operational reliability, settlement speed, and transparency before committing capital. By modernizing its settlement system, Nigeria improves its attractiveness as an investment destination and signals that it can operate at global standards.

A stronger capital market also facilitates capital formation. Companies rely on the market to raise long-term funding for expansion, innovation, and job creation. With faster, more secure settlement processes, investor confidence grows, increasing the likelihood of capital inflows into productive sectors of the economy. In this sense, T+1 settlement is not just a technical upgrade, it is a step toward broader economic growth and financial stability.

However, the transition is not without challenges. T+1 requires faster trade processing, which means confirmations, allocations, reconciliations, and funding arrangements all must occur within a single day. For institutions still relying on manual processes, this can be a significant operational pressure point. To meet these demands, the market will need enhanced automation, better technology infrastructure, and closer coordination among brokers, custodians, registrars, and settlement banks.

At the global level, these challenges are manageable. The United States completed its shift to T+1 in 2024, supported by extensive industry coordination and technology upgrades. Canada and Mexico also transitioned to T+1 to align with North American trading systems, while India adopted a phased approach in its equity markets, allowing participants to adjust gradually. The lessons are clear: success hinges on collaboration, careful planning, and technological readiness.

Nigeria’s move toward T+1 settlement underscores the country’s commitment to innovation, resilience, and global integration. Done well, this transition can make trading faster and safer, attract new investors, and support economic growth in a way that extends beyond the markets into the real economy. While T+0 where trades are settled on the same day is the ideal standard, it remains relatively uncommon as a default across markets. China’s local equity market has implemented T+0, and India applies it selectively to certain stocks.

Oni, an Integrated Communications Strategist, Chartered Stockbroker, Commodities Broker and Capital Market Registrar, is the Chief Executive Officer, SofunixInvestment and Communications