The Securities and Exchange Commission (SEC) has clarified that fund and portfolio managers will now be required to hold 0.1% of Assets Under Management (AUM) as regulatory capital, correcting an earlier communication that suggested a far higher 10% requirement. The clarification follows intense feedback from capital market operators after the rule was outlined in a circular issued on January 16, 2026.
Sources within the SEC confirmed the revision to Nairametrics, noting that the earlier figure had sparked widespread concern across the investment management industry. SEC Director-General, Dr. Emomotimi Agama, is expected to formally announce and explain the correction during a stakeholder briefing scheduled for next week.
The adjustment significantly eases the capital burden on large asset managers and helps avert what industry leaders feared could destabilise the investment management landscape. Under the initial interpretation, firms managing large pools of assets faced capital demands that many described as excessive and disconnected from the actual risks borne by fund managers.
Under the revised framework, Tier 1 fund and portfolio managers must maintain a minimum capital base of ₦5 billion, plus an additional 0.1% of AUM for assets exceeding ₦100 billion. The original 10% interpretation would have forced firms like Stanbic IBTC Asset Management, with over ₦11 trillion in AUM, to raise an unrealistic ₦1.1 trillion in capital—far exceeding even the capital levels of Nigeria’s largest banks. With the correction, this requirement falls sharply to about ₦11 billion. Other market operators are also affected by the reforms, including brokers (₦600 million), dealers (₦1 billion), broker-dealers (₦2 billion), issuing houses (₦2–₦7 billion), and digital asset platforms (₦2 billion), with implementation set for June 30, 2027.
While the SEC’s broader goal of strengthening investor protection and market resilience has been welcomed, operators have described the capital hikes—particularly for fund managers—as aggressive. A policy memorandum reviewed by Nairametrics argued that fund managers act as fiduciary agents rather than principal risk-takers like banks, making bank-style capital rules inappropriate. Financial modelling in the report showed that even profitable managers could earn returns on capital below Nigeria’s risk-free rate, potentially discouraging growth, encouraging asset fragmentation, and weakening competition in the sector.
Why this matters is clear: the SEC’s decision to correct the AUM capital rule from 10% to 0.1% represents a crucial course adjustment that balances regulation with economic reality. It reduces the risk of firms downsizing, restructuring, or capping growth to avoid punitive costs, while also aligning Nigeria more closely with global standards in markets such as the UK, US, and EU. However, concerns remain around the flat ₦5 billion minimum for Tier 1 managers, with analysts expecting continued calls for a more risk-sensitive, graduated approach as the 2027 deadline approaches.
source: Nairametrics