A Dynamic Approach To Capitilisation: Understanding The Implications Of Revised Minimum Capital Requirements From The Market Regulators

1. Introduction

The Securities and Exchange Commission (the “SEC”) issued the Revised Minimum Capital for Regulated Capital Market Entities (the “Circular”) on January 16, 2026, to repeal the Minimum Capital Requirement for Capital Market Operators (CMOs), which the SEC had earlier issued in 2023. Subsequently, the Circular was supplemented by an implementation framework, the Guidelines on Revised Minimum Capital for Regulated Capital Market Entities issued on March 18, 2026 (the “Guidelines”). The issuance of the Circular and the Guidelines is rooted in the Federal Government of Nigeria’s broader strategy of strengthening the resilience of financial institutions and markets by promoting robust capital adequacy and effective risk management. In furtherance of this objective, the Circular and the Guidelines introduce a more risk-sensitive minimum capital framework for CMOs, reflecting international regulatory trends that increasingly align capital adequacy requirements with the nature, scale and risk profile of regulated activities.

The Circular provides for a new ad valorem minimum capital requirement for Capital Market Operators (CMOs) whose ‘underlying assets are of an ever-increasing nature’ while ascribing an increased flat minimum capital requirement for other CMOs. To compliantly recapitalise ahead of the deadline of June 30, 2027, CMOs would expectedly need to carry out capital raising exercises such as public offer of shares. These capital raising exercises will also continue for those CMOs whose ‘underlying assets are of an ever-increasing nature’. In light of this, market participants should clearly understand the legal and financial implications of the Circular and the Guidelines.

2. The New Dynamic Minimum Capital Requirements

Prior to the issuance of the Circular, the minimum capital requirements for most Capital Market Operators (“CMOs”) were prescribed as fixed monetary thresholds. For example, brokers were required to maintain a minimum capital of ₦200 million, dealers ₦100 million, broker-dealers ₦300 million, issuing houses ₦200 million, while fund and portfolio managers were generally required to maintain a minimum capital of ₦150 million, irrespective of the value of assets under management. The flat figure thresholds permitted CMOs whose ‘underlying assets were of an ever-increasing nature’ to have assets which greatly superseded their capital base. Such an approach differs from the increasingly risk-sensitive capital adequacy frameworks adopted by securities regulators internationally, which seek to align regulatory capital with the nature, scale and risk profile of regulated activities.¹  The Circular seeks to address this imbalance by introducing a tier-based minimum capital framework for specified categories of CMOs, under which capital requirements are linked to the value of assets under management or assets under control. The specified categories of CMOs subject to the tier-based capital framework are as follows²:

The implication of the above is that CMOs must recapitalise to first meet the compliance deadline of 30 June 2027 and again recapitalise whenever their assets under management (or control) increases beyond their current tier. Notably, CMOs whose revised minimum capital requirements remain fixed, such as brokers, dealers, broker/dealers, issuing houses (with or without underwriting), registrars and trustees, will only be required to recapitalise once to meet the compliance deadline of 30 June 2027. The increase of the flat minimum capital requirements for these CMOs appears to be on the back of new economic realties. The realties include increased market participation, and the emergence of sophisticated investment products.³ Some of the significant increases are as follows;⁴

Alongside the above, the Circular also introduces specific capital requirements for newly regulated market participants such as Virtual Asset Service Providers, Digital Asset Exchanges, Digital Asset Custodians, and other technology-driven capital market operators.

Taken together, the Circular reflects a substantial increase in the capital thresholds applicable to most categories of CMOs. The scale of the review underscores the SEC’s commitment to strengthening the financial resilience and operational capacity of CMOs while promoting investor confidence and market stability.⁵

3. Strengthening the Nigerian Capital Markets

The Circular forms part of the SEC’s broader regulatory strategy to reinforce the resilience, stability, and competitiveness of the Nigerian capital market. By revising the minimum capital requirements for Capital Market Operators (“CMOs”), the SEC seeks to ensure that market participants maintain adequate financial capacity to support their operations, effectively manage evolving market risks and inspire greater investor confidence. The revised minimum capital framework is therefore intended not only to enhance the financial viability of regulated entities but also to support the continued development and integrity of Nigeria’s capital market. In this regard, the Circular seeks to achieve the following principal objectives:⁶

1. Fostering Financial Resilience

SEC aims to ensure that CMOs maintain sufficient financial capacity to absorb operational, financial and market risks. Well-capitalised institutions are generally better positioned to withstand economic shocks and maintain operational continuity during periods of market stress.

1. Enhancing Investor Protection

Capital adequacy serves as an important safeguard against operator insolvency and operational failure. By requiring higher capital buffers, SEC seeks to reinforce investor confidence and promote trust in the Nigerian capital market.

1. Aligning Capital with Risk Exposure

The Circular adopts a more risk-sensitive approach by linking capital requirements to the complexity, scope, and risk profile of regulated activities. Operators undertaking higher-risk activities are therefore required to maintain correspondingly higher capital levels.

1. Supporting Market Development and Innovation

SEC has expressly acknowledged the emergence of new market segments, particularly digital assets, and commodities markets. The revised framework seeks to support innovation while ensuring that new market participants maintain adequate financial stability.

4. Compliance Framework Under the Guidelines

In addition to the Circular, the SEC issued the Guidelines outlining the steps required for compliance with the Circular.

The Guidelines provide that⁷:

• The revised capital requirements become applicable to all new CMOs who register from January 16, 2026;
• Existing CMOs are required to achieve full compliance on or before 30 June 2027;
• Existing CMOs were required to submit board-approved capitalisation plans to the SEC by April 30, 2026; and
• CMOs unable to meet the revised requirements may consider restructuring, scaling down operations or applying for licence reclassification where permissible.

The Guidelines also specify that only the following capital components will be considered when the SEC is assessing compliance:

• fully paid-up ordinary share capital;
• fully paid-up irredeemable preference shares that are subordinated to all;

creditors and does not impose mandatory dividend obligations;

• share premium arising from fully paid-up capital issued for cash; and
• retained earnings arising from audited profits less any unrealized gains.

5. Market Outlook

Beyond compliance, the recapitalisation by CMOs to meet the June 30, 2027, will create opportunities for retail investors, high net worth individuals, and institutional investors to invest in the shares of CMOs.

Market participants will likely experience increased need for legal, financial, and regulatory advice in relation to capital raising transactions, mergers and acquisitions, corporate restructurings, regulatory compliance programmes, as well as licence restructuring or reclassification exercises.

6. Conclusion

The SEC’s Circular and Guidelines represent a transformative step in modernising Nigerian Capital Market Infrastructure. By introducing the dynamic minimum capital requirements through the Circular and the Guidelines, the SEC seeks to ensure that it builds a consistently resilient, transparent, and investor-friendly market capable of supporting long-term economic growth for a transparent and global competitive capital market.

While compliance may present operational and financial challenges for some market participants, the reforms are expected to enhance market stability, improve investor confidence, and strengthen the overall integrity of Nigeria’s capital market ecosystem.

With the 30th June 2027 compliance deadline approaching, the clock is steadily winding down. For CMOs, this is more than a regulatory milestone—it is an opportunity to reinforce financial resilience and strategic readiness.  Those who act early to assess their capital positions, evaluate compliance pathways, and engage professional advisers will be best positioned to navigate the transition with confidence and emerge stronger under the revised regulatory framework.

Footnotes

1.   Chrysanthopoulou, X., Mylonidis, N. & Sidiropoulos, M. “Regulatory Capital Requirements, Inflation Targeting, and Equilibrium Determinacy” Open Econ Rev 36, 63–104 (2025) available at  https://doi.org/10.1007/s11079-024-09754-9 last accessed 24th of June 2026.

2.    Section 4 Securities and Exchange Commission, Circular No. 26-1: Revised Minimum Capital (MC) for Regulated Capital Market Entities 6 January 2026 (SEC Circular on Revised Minimum Capital 2026), https://sec.gov.ng/documents/1427/CIRCULAR_Number_26-1._Minimum_Capital_Requirements.pdf , last accessed 24th of June 2026.

3. Elisha Bala-Gbo-gbo ‘Nigeria raises capital requirements in sweeping securities industry reform’ Reuters 16 January 2026, available at https://www.reuters.com/sustainability/boards-policy-regulation/nigeria-raises-capital-requirements-sweeping-securities-industry-reform-2026-01-16/#:~:text=ABUJA%2C% 20 Jan%2016%20(Reuters),a%20circular%20showed%20on%20Friday last accessed 24th of June 2026.

4.  Section 4 SEC Circular on Revised Minimum Capital 2026.

5. Elisha Bala-Gbo-gbo, op cit.

6. Securities and Exchange Commission https://sec.gov.ng/for-investors/keep-track-of-circulars/revised-minimum-capital-mc-for-regulated-capital-market-entities/ last accessed 24th of June 2026.

7. Guidelines on Revised Minimum Capital for Regulated Entities 18th March 2026 (Guidelines on Revised Minimum Capital 2026) available at https://sec.gov.ng/documents/1445/Guidelines_on_New_Capital_Base_CMOS_2026.pdf  last accessed 20th of June 2026.

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