.Gives a deadline of June 2027
.Tier 2 issuer houses need N7bn
The Securities and Exchange Commission (SEC) has revised the minimum capital applicable to all categories of regulated capital markets entities after 10 years.
According to the SEC, 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 have sufficient financial capacity to discharge their obligations in a sustainable manner.
“The revised minimum capital framework aims to: enhance the financial soundness and operational flexibility 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 sectors, including digital assets and commodity markets,” the SEC said in a circular to market operators seen by BusinessDay on January 16.
The SEC circular was sent to all entities regulated by the Commission, including, but not limited to, major and non-major capital market operators; Market Infrastructure Institute; capital markets advisors; financial technology (fintech) operators; Virtual Asset Service Provider (VASP); And
Commodity market arbitrageur.
The circular said all affected entities are required to comply with the revised minimum capital requirements on or before June 30, 2027.
“Entities that fail to comply with the prescribed requirements within the prescribed timelines will be subject to appropriate regulatory sanctions, including suspension or withdrawal of registration, as may be determined by the Commission,” the SEC said.
Tier-1 Portfolio Managers (Full Scope) involved in the management of Collective Investment Schemes (CIS) and Alternative Investment Funds (Private Equity, Venture Capital, Infrastructure Funds, etc.) above N20 billion Net Asset Value (NAV), or discretionary and non-discretionary private portfolio management services with Assets Under Management (AUM) above N20 billion, or exposure to foreign instruments up to 40 per cent of NAV, are now required. Minimum capital of N5 billion as against N150 million.
“Any fund and portfolio manager with NAV/AUM of more than N100 billion must have a minimum of 10 per cent of NAV/AUM as capital,” the SEC said.
For Tier-2 fund/portfolio managers (limited scope) who are in the business of management of collective investment schemes with restricted capital not exceeding 10 times the required capital on Net Asset Value (NAV) (N20 billion), or discretionary and non-discretionary private portfolio management services not exceeding N20 billion, or exposure to foreign instruments not exceeding 20 per cent of NAV, they are now required to have N2 billion as minimum capital. Is. Less than N150 million.
Similarly, broker-dealers whose services include: client execution, proprietary trading, margin/securities lending and advisory services no longer require N300 million minimum capital to operate, but N2 billion.
The SEC said the minimum capital review from 2015 is in line with its mandate under the Investments and Securities Act 2025 to regulate and develop the Nigerian capital market.
Also, Tier 1 issuing houses that do non-interest finance services, advisory and arrangement services but do no underwriting are now required to have N2 billion as against N200 million; While Tier 2 – houses issuances with underwriting and provides a 'one-stop-shop' for issuers, provides underwriting services, and advisory and product development services, this business requires a N7 billion minimum capital as against N200 million.
Also, the minimum capital requirement for brokers (client execution only) has been increased from N200 million to N600 million, while the minimum capital requirement for dealers (proprietary trading only) has been increased from N100 million to N1 billion.
Broker-dealers (client execution, proprietary trading, margin/securities lending and advisory services) have been increased from N300 million to N2 billion, while sub-brokers (digital) have been increased from N10 million to N100 million; Sub-Broker (Corporate) has been increased from N10 million to N50 million. Also, sub-brokers (individuals) now require N10 million minimum capital for business compared to N2 million, while inter-dealer brokers require N2 billion compared to N50 million.
