Nigeria's SEC Sets New Minimum Capital Requirements for Market Operators by 2027

Nigeria’s Securities and Exchange Commission (SEC) has revised the minimum capital for regulated entities operating in the capital market. SEC requires all affected entities to comply with the revised Minimum Capital requirements on or before June 30, 2027. The revised minimum capital framework seeks to: enhance the financial soundness and operational resilience of market operators; align capital requirements with the scope, complexity, and risk exposure of regulated activities; promote market stability and systemic risk mitigation; and support innovation and orderly development of new market segments, including digital assets and commodities markets. The SEC said the minimum capital review is informed by the need to strengthen market resilience, enhance investor protection, align capital adequacy with the evolving risk profile of market activities, and ensure that regulated entities possess sufficient financial capacity to discharge their obligations in a sustainable manner. According to the SEC, entities that fail to meet the prescribed requirements within the stipulated timeline shall be subject to appropriate regulatory sanctions, including suspension or withdrawal of registration, as may be determined by the Commission. Read also: SEC’s capital hike puts survival of the fittest to the test Below are the current minimum capital requirements for the firms and the benchmark capital they are expected to have by June 2027. Regulated Entities Min. Capital (since 2015) Min. Capital (by 2027) A) Core Regulated Functions: Brokerage Services: Broker (client execution only) N200 million N600 million Dealer (proprietary trading only) N100 million N1billion Broker-Dealer· client execution, proprietary trading, margin/securities lending and advisory services. Sub-Broker (Digital) N300 million N2 billion Sub-Broker (Corporate) N10 million N100 million Sub-Broker (Individual) N10 million N50 million Inter-Dealer Broker N2 million N10 million Fund/Portfolio Management Services: N50 million N2 billion Tier 1 –Portfolio Managers (Full Scope) · Management of Collective Investment Schemes (CIS) and Alternative Investment Funds (Private Equity, Venture Capital, Infrastructure Funds etc.) above N20billion Net Asset Value (NAV). · Discretionary and Non-Discretionary Private Portfolio Management Services above N20 billion Assets under Management (AuM). · Exposure to foreign instruments up to 40percent of the NAV. Note – Any Fund and Portfolio Manager with NAV/AuM of more than N100 billion should have a minimum of 10 percent of the NAV/AuM as capital. N150 million N5 billion Tier 2 –Fund/Portfolio Managers (Limited Scope) · Management of CIS with limited pooled fund creation of not more than 10 times the required capital (N20billion) on Net Asset Value (NAV). · Discretionary and Non-Discretionary Private Portfolio Management Services of not more than N20billion. · Exposure to foreign instruments of not more than 20 percent of the NAV. N150million N2 billion Tier 3 – Alternative Investment Fund Managers: Private Equity Fund Manager N150million N500million Venture Capital Fund Manager N20 million N200 million B) Non-Core Regulated Functions: Issuing House: Tier 1 – Issuing House · Non-Interest Finance services · Advisory & Arrangement services · No underwriting N200million N2 billion Tier 2 –Issuing House with Underwriting · Offers a ‘one-stop-shop’ for issuers. · Provide underwriting services. · Renders advisory and product development services. N200 million N7 billion Rating Agency N150 million N500 million Registrar N150 million N2.5 billion Trustees N300 million N2 billion Underwriters N200 million N5 billion Investment Adviser (Corporate) N5 million N50 million Investment Adviser (Individual) N2million N10 million C) Market Infrastructure: Central Counter Party (CCP) N5billion N10 billion Clearing and Settlement Company (CSC) N200 million N5 billion Composite Securities Exchange · Trading and Listing of all types of securities. N500 million N10 billion Non-Composite Securities Exchange · Focus on a single type of security, commodity or financial product. N500million N5 billion Trade Repository N100 million N150 million D) Consultants: Capital Market Consultant (Corporate) N5million N25million Capital Market Consultant (Individual) N500,000 N2 million Capital Market Consultant (Partnership) N2 million N10 million E) Fintechs: Robo Adviser N10 million N100 million Crowd Funding Intermediary N100 million N200million F) Virtual Asset Service Providers: Ancillary Virtual Assets Service Providers (AVASPs) N/A N300 million Digital Assets Offering Platform (DAOP) N500million N1 billion Digital Assets Intermediary (DAI) N/A N500 million Digital Assets Platform Operator (DAPO) (including Token issuers) N/A N500million Real-world Assets Tokenisation and Offering Platform (RATOP) N/A N1billion Digital Assets Exchange (DAX) N500 million N2 billion Digital Assets Custodian N500 million N2 billion. G) Commodity Market Intermediaries: Collateral Management Company (CMC): Tier 1 – Local/ Regional Operations N50 million N200 million Tier 2 – National/International reach N50 million N500 million Commodities Broker/Dealer N10 million N50 million Commodities Broker N7 million N30 million Commodities Dealer N3 million N20 million Warehousing Operators N50 million N500 million H) Other Entities Custodian of Securities (Bank) N200 million as prescribed by the CBN Non-Bank Custodian – N50 billion + 0.1 percent of AUC Dealing Member Banks N200 million as prescribed by the CBN Nominee Company 0.001 million N5 million Receiving Banker (Banker to an Issue) N200 million N/A