The Securities and Exchange Commission (SEC) has proposed sweeping new rules for Nigeria’s online forex and Contracts for Difference (CFD) market, including a N3 billion minimum paid-up capital for market-making forex brokers and N5 billion for technology and trading platforms. The proposed SEC forex regulations are aimed at bringing both local and offshore operators serving Nigerian traders under a formal licensing and supervision framework.
Under the draft Rules on Online Forex Trading and Contracts for Difference, the SEC has created three major licence categories: Online Forex Broker/Broker Dealer, Introducing Broker, and Technology/Platform Provider. B-Book or market-making brokers would need N3 billion in paid-up capital, while STP, ECN or A-Book brokers would require N2 billion. Technology and platform providers face the highest threshold at N5 billion, while corporate and individual Introducing Brokers would require N150 million and N30 million respectively.
The proposed framework also introduces a 30% minimum Nigerian ownership requirement for licensed forex operators. At least 30% of a broker’s issued and paid-up share capital must be held directly and continuously by Nigerian citizens who are directors of the company. At least two directors, including the Managing Director or Chief Executive Officer, must also be resident in Nigeria. The SEC said the requirement cannot be bypassed through nominees, trusts or similar arrangements, potentially raising the compliance bar for offshore brokers targeting Nigerian traders.
The rules go beyond capital and ownership requirements, with several measures designed to strengthen investor protection. Client funds would have to be kept in segregated accounts at CBN-licensed banks, while retail traders would receive negative-balance protection and face mandatory position close-outs when equity falls to 50% or less of required margin. Retail leverage would also be capped, while brokers would be required to disclose the percentage of retail accounts that lose money each month. Bonuses, trading contests, referral incentives and PAMM arrangements would be prohibited, while technology providers would have to maintain at least 99.5% platform uptime and report major cybersecurity incidents within 24 hours.
The proposed rules are not yet in force, but existing and informal operators would have three months to submit registration applications and six months to complete compliance once the framework takes effect. The move builds on the Investments and Securities Act (ISA) 2025, which gave the SEC stronger legal backing to regulate online forex platforms and other investment activities. The Commission has repeatedly warned Nigerians against unregistered forex and crypto platforms, signalling that the era of largely unregulated online trading in Nigeria could be entering a much stricter phase.
source: nairametrics
