Stock exchange: ASHON leader praises CSCS payment processing timeframe

The Chairman of the Association of Securities Dealing Houses of Nigeria, Sehinde Adenagbe, views the newly introduced T+1 settlement cycle by CSCS PLC as a groundbreaking development that will bolster market efficiency, mitigate settlement risks, and foster investor confidence in Nigeria's capital market.

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According to Adenagbe, the transition to the T+1 settlement cycle marks a pivotal moment in the evolution of Nigeria's securities market, necessitating swift adaptation by stockbroking firms to a more rapid settlement environment.

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The initiative, Adenagbe notes, will profoundly alter trade processing dynamics across brokerage firms, placing heightened emphasis on operational efficiency, liquidity management, and technology-driven processes.

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Adenagbe observes that the T+1 settlement cycle constitutes a major reform that will enhance market efficiency and fortify the integrity of the trading ecosystem, while also elevating operational expectations for brokers.

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Brokers, he emphasizes, must now maintain near real-time settlement readiness, stronger liquidity buffers, and more automated post-trade processes in order to comply with the new settlement cycle.

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One of the primary benefits of the new regime, Adenagbe points out, is the reduction of counterparty and settlement risks, as transactions will now be completed within one business day after execution.

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The shorter settlement period, he adds, will improve market confidence by facilitating faster movement of cash and securities.

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While acknowledging the long-term advantages of the initiative, Adenagbe cautions that brokers will need to adjust their liquidity management strategies to cope with the shorter settlement window.

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The long-term gains, he asserts, are substantial, including lower settlement risk, improved market confidence, and greater operational efficiency, but brokerage firms must be proactive in managing liquidity and strengthening internal processes.

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Adenagbe commends the Securities and Exchange Commission for approving the transition and the Board and Management of CSCS PLC for driving the reform, describing it as a strategic step toward aligning Nigeria's capital market infrastructure with global best practices.

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He expresses confidence that the T+1 settlement cycle will enhance the attractiveness of the Nigerian capital market to both domestic and international investors by improving efficiency, transparency, and overall market resilience.

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The T+1 settlement cycle, recently implemented by CSCS PLC, reduces the settlement period for securities transactions from two business days to one, representing one of the most significant post-trade reforms undertaken in the Nigerian capital market in recent years.