The Securities and Exchange Commission has clarified that fund and portfolio managers are required to hold 0.1 per cent of Assets Under Management as regulatory capital, not 10 per cent as initially indicated in its January 16, 2026, circular.

Reliable sources within the SEC confirmed the correction following feedback from capital market operators, according to Nairameteics.

SEC Director General, Dr. Emomotimi Agama, is expected to make the clarification official next week.

The clarification sharply reduces the capital burden for large asset managers, averting what industry leaders feared could destabilize the investment management sector.

Under its sweeping regulatory reforms, the SEC raised capital requirements across almost all segments of the capital market.

Tier 1 fund and portfolio managers must now hold N5 billion in capital, plus an additional 0.1 per cent of Assets Under Management for firms managing over N100 billion.

The Commission had initially proposed a 10 per cent AUM-linked requirement, which would have forced a firm like Stanbic IBTC Asset Management—with over N11 trillion in AUM, to raise N1.1 trillion in regulatory capital.

While the SEC’s efforts to strengthen investor protection and enhance market resilience were broadly welcomed, industry players described the proposed capital increases—especially for fund managers, as overly aggressive.

The memorandum emphasizes that fund managers act as fiduciaries, not risk-takers like banks, and therefore should not be subject to capital rules designed for principal-based institutions.

It also uses financial modeling to demonstrate how the proposed requirements could make asset management economically unviable.

For example, a Tier 1 manager with N50 billion in AUM and a 1.5 per cent management fee would generate about N750 million in revenue, yielding roughly N350 million in profit—just a 7 per cent return on N5 billion in capital, well below Nigeria’s risk-free rate.

The SEC’s revision of the AUM-linked capital rule from 10 per cent to 0.1 per cent represents a crucial course correction. It allows the Commission to pursue its goals of market stability and investor protection without threatening the sustainability of top-tier fund managers.

Under the original rule, firms faced the risk of restructuring, downsizing, or artificially limiting growth to avoid the burden of steep regulatory costs.

Ogah