Nigeria’s Securities and Exchange Commission (SEC) has unveiled a sweeping revision of minimum capital requirements for regulated capital market entities, marking one of the most significant prudential reforms in the industry in over a decade.

What’s New in the Capital Framework?

Under the new framework, SEC has increased baseline capital levels for key categories of market participants:

Broker-Dealers will now operate with a revised minimum capital of ₦2 billion, up from ₦300 million, reflecting a calibrated approach to capital adequacy tied to operational scope.
Portfolio Management Firms have seen tiered increase, with full-scope managers now set at ₦5 billion and limited-scope managers at ₦2.00 billion, up sharply from ₦150 million previously.
Fund Managers in private equity and venture capital segments also received significant capital uplift targets.
Market Infrastructure Entities such as clearing and settlement companies and securities exchanges now face higher thresholds, with composite exchanges required to maintain ₦10.00 billion minimum capital.
Fintech and Virtual Asset Service Providers (VASPs) such as digital asset platforms and custodians are now explicitly captured within the regulated regime with meaningful capital floors, an indication of SEC’s push to integrate new technology-driven business models into formal market infrastructure.
Commodity Intermediaries and Consultants are included with updated requirements tailored to reflect their market roles.

Compliance Timeline

All affected entities are required to comply with the revised minimum capital requirements on or before 30 June 2027. SEC has indicated that non-compliant firms may face sanctions, including suspension or withdrawal of registration.

However, the Commission also noted that transitional arrangements may be considered on a case-by-case basis, with additional guidance on capital verification and compliance processes to be issued separately.

Implications for Industry Structure

Beyond strengthening prudential buffers, the revised framework is widely expected to reshape the structure of Nigeria’s capital market industry.

For smaller and mid-sized operators, the higher capital thresholds could accelerate mergers, acquisitions and strategic partnerships as firms seek scale, balance sheet strength, and operational synergies to meet the new requirements. Some operators may choose to narrow their licence scope, while others could exit certain business lines entirely.

Larger and well-capitalised firms, on the other hand, may view the transition period as an opportunity for market consolidation and expansion, potentially increasing concentration in some segments of the industry.

Credit Rating Perspective: Stronger Buffers, New Risks

From a credit rating standpoint, the revised capital regime presents a dual impact.

On the positive side, higher minimum capital levels generally support:

Stronger loss-absorption capacity
Improved business sustainability
Greater investor and counterparty confidence
Lower probability of operator failure, particularly among systemically important infrastructure entities

These factors can be credit-positive over the medium to long term, especially where capital is raised through equity rather than debt.

However, transitional risks are also material, particularly during the adjustment period leading up to 2027:

Leverage Risk: Firms that rely heavily on borrowing to meet new capital thresholds may weaken their balance sheets, increasing financial risk and pressuring credit profiles.
Earnings Strain: Rapid capital raising could dilute returns and place pressure on profitability, especially if revenue growth does not keep pace with expanded capital bases.
Execution Risk: Mergers and acquisitions, while potentially beneficial, introduce integration, governance and operational risks that can weigh on credit quality in the short term.
Business Transition Risk: Smaller firms that downscale or change their licence categories may face revenue volatility or franchise erosion.

For market infrastructure providers and large asset managers, the reforms are broadly supportive of systemic stability, which is a key credit strength.