Nigeria SEC Approves Mark-to-Market Valuation for Bonds, Ushers in Transparency Era for Fund Managers

The Securities and Exchange Commission (SEC) of Nigeria has approved a landmark reform requiring fund managers to value fixed income securities at current market prices rather than at purchase cost. Announced on September 22, 2025, the directive introduces a two-year transition period for full compliance and signals the regulator’s push to make Nigeria’s capital market more transparent and globally aligned.

Under the new rule, fund managers will gradually shift from amortized cost accounting to a mark-to-market system that reflects real-time asset values. During the grace period, the SEC will allow a temporary 50:50 split between amortized cost and mark-to-market—down from the usual 70:30 ratio—to ease the adjustment. However, all new fixed-income purchases must be marked to market immediately, and each fund manager must submit a compliance plan to the SEC by October 2, 2025.

To smooth the transition, the regulator is partnering with the Fund Managers Association of Nigeria (FMAN) and other stakeholders to launch investor-education initiatives. These programs aim to help the investing public understand how daily valuations may introduce more short-term price swings but ultimately lead to fairer, more accurate reporting of portfolio values.

Industry experts have welcomed the reform while warning of short-term pain. Arnold A. Dublin-Green, Chief Investment Officer at Cordros Capital, described the change as a “game changer” that will expose hidden risks and distinguish disciplined managers from those relying on outdated accounting. He noted that legacy bonds bought during the low-yield COVID era will show significant losses under the new system, but added that this transparency will boost trading activity, improve liquidity and rebuild investor trust.

Analysts at Nairametrics echoed these sentiments, writing that transparent fund valuation empowers investors, strengthens market credibility and attracts new capital. By forcing managers to engage more actively with the bond market and support price discovery, the SEC hopes to create a deeper, more dynamic financial ecosystem. Over time, stakeholders believe the reform could be a turning point for Nigeria’s fixed income market, aligning it with global best practices and restoring confidence among local and international investors.

source: nairametrics