Nigeria’s Securities and Exchange Commission (SEC) has announced the most sweeping capital market reform in over a decade, dramatically increasing minimum capital requirements for operators and setting a June 30, 2027 compliance deadline that could redefine who survives in the industry. The new rules raise capital thresholds by as much as 40 times in some segments, signaling a decisive push toward a smaller, more resilient, and tightly capitalised market.
Under the revised framework, Tier-1 portfolio managers must now maintain a minimum capital base of ₦5 billion, Tier-2 issuing houses ₦7 billion, and broker-dealers ₦2 billion—figures that mark a sharp departure from previous requirements. According to the SEC, the overhaul is designed to align capital adequacy with evolving market risks, strengthen investor protection, and support innovation in areas such as digital assets and commodities.
Market participants, however, warn that the scale and timing of the increase could trigger forced mergers, quiet exits, and restructurings, particularly among smaller asset managers and brokers. Critics argue that applying bank-style capital logic to asset managers—who operate largely on an agency model—misreads the nature of capital market risk and may penalize firms that play a critical role in retail investor participation.
The pressure is especially acute for brokers and issuing houses, where minimum capital levels have jumped several-fold. While large, institutionally connected firms are expected to absorb the changes with relative ease, smaller operators fear being crowded out, potentially reducing market inclusion even if headline liquidity metrics improve. Supporters of the reform counter that consolidation could enhance oversight, professionalism, and long-term market credibility.
Amid criticism, the SEC has clarified that a widely disputed requirement for asset managers to hold capital equal to 10 percent of assets under management was a clerical error, confirming the intended threshold is 0.1 percent. While the regulator insists the reforms reflect Nigeria’s economic evolution and global best practices, the debate continues over whether the capital hike has been calibrated with precision—or applied with blunt force.
source: Business day