Stock exchange: ASHON Leader praises CSCS payment processing timeframe

Sehinde Adenagbe, Chairman of the Association of Securities Dealing Houses of Nigeria (ASHON), 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 shift to T+1 settlement marks a pivotal moment in the evolution of Nigeria's securities market, necessitating swift adaptation by stockbroking firms to a faster settlement environment.

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The new settlement framework, Adenagbe notes, will revolutionize 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 is a major reform that will enhance market efficiency and strengthen the integrity of the trading ecosystem, but it also raises operational expectations for brokers, who must now maintain near real-time settlement readiness and stronger liquidity buffers.

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The ASHON Chairman highlights that one of the key benefits of the new regime is the reduction of counterparty and settlement risks, as transactions will now be completed within one business day after execution.

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Adenagbe adds that the shorter settlement period will improve market confidence by enabling faster movement of cash and securities, ultimately benefiting the market as a whole.

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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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He emphasizes that the long-term gains 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 to ensure seamless compliance with the new settlement cycle.

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Adenagbe commends the Securities and Exchange Commission (SEC) 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.