Nigeria's capital market has received another vote of confidence from the global investment community following the decision by S&P Dow Jones Indices (S&P DJI) to place the country on its 2027 Watchlist for possible reclassification from a Standalone Market to a Frontier Market.
The development has been welcomed by the Chartered Institute of Stockbrokers (CIS) and the Association of Securities Dealing Houses of Nigeria (ASHON), which described the move as a major validation of the reforms implemented across the country's capital market in recent years.
In a joint position paper released on Tuesday and signed by CIS President, Fiona Ahimie, and ASHON Chairman, Sehinde Adenagbe, the two market bodies said the decision reflects growing international confidence in Nigeria's investment environment and the progress made in strengthening market operations.
According to the statement, the Watchlist inclusion is a "significant endorsement of the far-reaching reforms undertaken within the Nigerian capital market" and "underscores the growing confidence of the international investment community in the country's evolving market architecture."
The organisations noted that the recognition by S&P DJI is evidence that efforts by regulators, market operators, infrastructure providers and other stakeholders are beginning to yield tangible results.
They said the decision reflects "increasing recognition of the sustained efforts of market regulators, infrastructure providers, dealing members, and other key stakeholders to strengthen market integrity, enhance operational efficiency, deepen liquidity, and align Nigeria's capital market with internationally accepted standards and global best practices."
According to the market bodies, ongoing reforms have improved transparency, strengthened investor protection and enhanced the overall competitiveness of Nigeria's financial markets.
They added that the latest development "affirms the effectiveness of ongoing initiatives aimed at improving market accessibility, transparency, investor protection, and overall competitiveness, thereby positioning Nigeria as an increasingly attractive destination for both domestic and foreign portfolio investment."
In its latest Country Classification Review, S&P Dow Jones Indices acknowledged the progress made by Nigerian authorities, stating that "the Nigerian regulatory environment has modernised to improve transparency, enforcement, and market integrity."
However, the index provider stressed that "consistency in policy application and operational resilience are required for reclassification," explaining why the country's performance will continue to be monitored through 2026 before a final decision is made.
Responding to the assessment, CIS and ASHON said the review represents a balanced evaluation of Nigeria's capital market reforms.
According to them, the assessment "demonstrates that Nigeria's reforms are being positively acknowledged while also identifying areas requiring sustained implementation before a final reclassification decision is made."
The two organisations also addressed concerns recently raised by FTSE Russell, which postponed Nigeria's reclassification after expressing reservations over the requirement for foreign investors to prefund market transactions.
Clarifying the issue, the market bodies maintained that the successful implementation of the T+1 Settlement Cycle has not altered the Nigerian market's Delivery versus Payment (DvP) framework.
They explained:
"Under the DvP principle, the transfer of securities and the corresponding payment occur simultaneously at settlement, thereby mitigating principal risk and eliminating the need for investors to make advance payments before settlement. Consequently, foreign portfolio investors are not required to prefund their transactions."
To further improve market accessibility for international investors, the organisations disclosed that the settlement cut-off time has been extended.
According to the statement, the "settlement cut-off time has been revised from 8:00am to 5:00pm. to better accommodate cross-border investors and facilitate their more effective participation in the Nigerian capital market."
While celebrating Nigeria's placement on the Watchlist, the market leaders cautioned against viewing the development as the final objective, urging regulators and industry participants to sustain the momentum of ongoing reforms.
They emphasised that "the placement of Nigeria on the Watchlist should not be viewed as the destination but as an important milestone on the journey towards securing full Frontier Market status."
Looking ahead, both organisations expressed confidence that continued policy consistency, operational improvements and collaboration across the financial ecosystem would position Nigeria for a successful upgrade.
They concluded:
"The CIS and ASHON remain optimistic that, with sustained reforms, policy consistency, operational excellence, and continued collaboration among all stakeholders, Nigeria will successfully attain Frontier Market classification in due course and aim for the next classification."