Nigeria's capital market is poised for significant enhancements with the upcoming adoption of a T+1 settlement cycle and a review of free-float requirements for listed companies. The transition to T+1 settlement, scheduled for May 29, 2026, aims to reduce settlement periods and improve post-trade efficiency.

This move is part of a broader strategy to align Nigeria's market with global best practices and boost investor confidence. The Central Securities Clearing System (CSCS) has informed stakeholders about the change, which will shorten the settlement window from the current T+2 to one business day after the trade date.

The Nigerian Exchange (NGX) Group, in conjunction with the Securities and Exchange Commission (SEC), is also reviewing free-float requirements. This initiative seeks to unlock liquidity, deepen the equity market, and attract more investors by reassessing rules that currently require large companies to make at least 20% of their shareholding or N40 billion worth of shares available for public trading. Companies on the Growth Board must float at least 15% of their share capital.

The review comes amid concerns that low levels of publicly tradable shares in some listed firms are limiting market liquidity and increasing the risk of price volatility. Temi Popoola, CEO of NGX Group, stated that the review includes optimizing existing free-float levels, ensuring data accuracy, and evaluating the appropriateness of current requirements as the market evolves. He also hinted at potentially basing equity and index weightings on shares outstanding rather than solely on market capitalization.

These reforms are occurring against a backdrop of strong market performance. On Monday, March 16, 2026, the NGX All-Share Index (ASI) surged past the 200,000-point milestone for the first time, closing at 201,474.89 points. This represents a 1.55% increase from the previous trading session and brings the year-to-date return to 29.47%. Market capitalization expanded to N129.33 trillion.

BUA Cement Plc was a notable gainer, rising 10.00% to N297.00, alongside Premier Paints Plc (up 9.79% to N21.30) and John Holt Plc (up 9.52% to N10.35). The FUGAZ banking group also showed strength, with Zenith Bank gaining 7.35% and UBA rising 5.49%. Trading activity was robust, with 948.1 million shares valued at N49.15 billion exchanged.

The migration to T+1 settlement is expected to reduce counterparty risk and transaction failures, aligning with SEC Director-General Dr. Emomotimi Agama's view that shorter settlement cycles are crucial for competitive global markets. The market has previously transitioned from T+3 to T+2 settlement in November 2025, indicating a phased approach to modernization.

The review of free-float rules may draw lessons from international markets, such as India, which mandated a minimum public shareholding of 25% to enhance liquidity and attract foreign investment. Analysts suggest that stricter free-float rules in Nigeria could significantly deepen the local equity market and improve investor confidence.