The Securities and Exchange Commission has reviewed and revised the minimum capital requirements applicable to all categories of regulated capital market entities for the first time in 10 years.
According to the Commission, the review of the minimum capital thresholds is driven by the need to strengthen market resilience, enhance investor protection, align capital adequacy with the changing risk profile of market activities, and ensure that regulated entities have sufficient financial capacity to meet their obligations on a sustainable basis.
“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 stated in a circular dated January 16 and issued to market operators.
The circular, which was seen by BusinessDay, was distributed to all entities regulated by the Commission, including core and non-core capital market operators, market infrastructure institutions, capital market consultants, financial technology operators, Virtual Asset Service Providers, and commodity market intermediaries.
All affected entities are required to comply with the revised minimum capital requirements on or before June 30, 2027, according to the circular.
“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,” the SEC said.
Under the revised framework, Tier-1 portfolio managers with full scope operations involved in the management of Collective Investment Schemes and Alternative Investment Funds, including private equity, venture capital and infrastructure funds, with net asset value above N20 billion, are now required to maintain a minimum capital base of N5 billion, up from the previous N150 million.
The new capital requirement also applies to Tier-1 portfolio managers offering discretionary and non-discretionary private portfolio management services with assets under management exceeding N20 billion, as well as those with exposure to foreign instruments of up to 40 percent of net asset value.
“Any Fund and Portfolio Manager with NAV/AuM of more than N100billion should have a minimum of 10 percent of the NAV/AuM as capital,” the Commission added.
For Tier-2 fund and portfolio managers with limited scope operations, the revised framework sets a minimum capital requirement of N2 billion, replacing the previous N150 million threshold.
This category includes managers of Collective Investment Schemes with limited pooled fund creation of not more than 10 times the required capital, amounting to N20 billion in net asset value, as well as discretionary and non-discretionary private portfolio management services not exceeding N20 billion, and exposure to foreign instruments capped at 20 percent of net asset value.
Broker-dealers offering client execution, proprietary trading, margin or securities lending, and advisory services are also affected by the review, with their minimum capital requirement increased from N300 million to N2 billion.
The SEC explained that the review of minimum capital requirements, last conducted in 2015, is in line with its statutory mandate under the Investments and Securities Act 2025 to regulate and develop the Nigerian capital market.
Tier-1 issuing houses that provide non-interest finance services as well as advisory and arrangement services, but do not engage in underwriting, are now required to maintain a minimum capital base of N2 billion, up from N200 million.
Tier-2 issuing houses that offer underwriting services, operate as one-stop shops for issuers, and provide advisory and product development services are now required to meet a minimum capital threshold of N7 billion, compared with the previous N200 million requirement.
The minimum capital requirement for brokers offering client execution only has been increased from N200 million to N600 million, while dealers engaged solely in proprietary trading must now maintain N1 billion in capital, up from N100 million.
Broker-dealers offering combined services including client execution, proprietary trading, margin or securities lending, and advisory services now require N2 billion in minimum capital, compared with the former N300 million threshold.
Sub-brokers operating digital platforms are now required to maintain N100 million in minimum capital, up from N10 million, while corporate sub-brokers must meet a revised requirement of N50 million, compared with the previous N10 million.
Individual sub-brokers will now require a minimum capital base of N10 million, an increase from N2 million, while inter-dealer brokers must raise their minimum capital to N2 billion from the former N50 million.
