We are collaborating with key players to shorten the settlement cycle – NGX

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Nigerian Exchange Limited (NGX) has announced its commitment to reducing the settlement cycle from T+3 to T+1 in collaboration with the Central Securities Clearing System (CSCS) Plc and other stakeholders. The exchange is working diligently to implement this change over the next few years. Additionally, NGX is exploring the use of advanced technological tools, such as Straight Through Processing (STP) of equity transactions, to enhance transparency in the Nigerian capital market.

STP is an automated mechanism that facilitates the end-to-end processing of financial instrument transactions, from initial deal to final settlement. By adopting STP, the market can benefit from increased transparency, reduced duplication of work and manual intervention, lower risks and errors, faster data processing and reporting, improved market efficiency and trade volumes, cost-effectiveness, and effective regulation through systematic audit trails.

NGX aims to ensure that investors can conduct their transactions efficiently and seamlessly. The implementation of STP will create a seamless settlement process for investors and enable real-time integration of enterprise Know-Your-Customer (KYC) procedures. While STP implementation may currently be costly, it is expected to become more affordable in the long run.

The use of STP is seen as a way to attract more participants, including young investors, to the capital market. It offers quicker access to a wide range of products, mitigates risks, and reduces operating costs. Through these efforts, NGX aims to keep pace with evolving market trends and provide the best possible services to investors.

Opinion: The commitment of Nigerian Exchange Limited to reduce the settlement cycle and explore advanced technological tools such as STP is a positive development for the Nigerian capital market. Shortening the settlement cycle from T+3 to T+1 will enhance efficiency and reduce counterparty risks. Embracing STP automation will streamline processes, improve transparency, and reduce errors, ultimately benefiting investors and market participants.

By leveraging technology and adopting international best practices, NGX aims to align itself with global market standards and attract more participants to the Nigerian capital market. The emphasis on transparency and efficiency is crucial for building investor confidence and driving market growth. As the market evolves, it is essential for exchanges and market infrastructure providers to stay at the forefront of technological advancements to meet the changing needs and expectations of investors.

The successful implementation of these initiatives will contribute to the development and modernization of the Nigerian capital market, making it more competitive on a global scale. It is encouraging to see stakeholders collaborating to drive positive change and improve market infrastructure. Continued efforts to adopt advanced technological tools and streamline processes will further strengthen the Nigerian capital market ecosystem.


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