Global index provider FTSE Russell has placed Nigeria’s planned reclassification to Frontier Market status under further review following the country’s transition to a T+1 settlement cycle, raising fresh concerns over the impact of the new trading system on foreign institutional investors.

Nigeria was upgraded from Unclassified to Frontier Market status in March 2026, with the change initially scheduled to take effect in September. However, FTSE Russell said it would now conduct a further assessment before taking a final decision and will provide an update by the end of August 2026.

According to the global index provider, Nigeria’s equity market moved from a T+2 to a T+1 settlement cycle on June 1, 2026. It explained that the shorter settlement period could effectively make the Nigerian market a prefunded market for international institutional investors, requiring them to provide funds before trades are completed.

FTSE Russell noted that compulsory pre-funding is considered a disadvantage under its Settlement Cycle (Delivery versus Payment) criterion, one of the five key Quality of Markets standards that countries must satisfy to qualify for Frontier Market status under its Equity Country Classification framework.

The organisation said it would continue to study the implications of the new settlement arrangement on international investors before deciding whether Nigeria should proceed with the planned reclassification.

Commenting on the broader assessment of market development,

Vice President of Highcap Securities Limited, David Adonri, said the quality of a capital market should not be judged by a single operational issue but by its overall performance and strength.

According to him, key factors such as market liquidity, capital formation, regulatory oversight, corporate governance, transparency, technological infrastructure and investor participation should all be considered when assessing the development of a market.

Adonri noted that Nigeria has recorded measurable progress across these critical areas in recent years, adding that ongoing reforms have strengthened the resilience of the capital market, improved coordination among regulators and enhanced the market’s capacity to support and finance large-scale economic activities.

He maintained that market classification frameworks should assess the Nigerian capital market as a complete ecosystem rather than allowing one implementation issue to overshadow the significant structural improvements that have been achieved.