FTSE Russell pauses Nigeria frontier market upgrade

Nigeria's planned upgrade to frontier market status by FTSE Russell has been paused, dealing a setback to the country's efforts to attract international investment. The global index provider announced on Tuesday, June 30, that it is placing the reclassification under further review, citing concerns over Nigeria's recent transition to a shorter settlement cycle for stock trades.

The upgrade, which was confirmed in March and scheduled to take effect in September, is now on hold. FTSE Russell stated the decision stems from Nigeria's move this month from a T+2 to a T+1 settlement cycle, meaning trades now settle one business day after execution instead of two. The company explained that this transition effectively creates a prefunded market for international institutional investors, who must provide funds before trades are completed. This requirement is viewed negatively under the Settlement Cycle Delivery-versus-Payment criterion, one of five core standards required for frontier market status within FTSE's classification scheme.

The policy shift is part of broader domestic equity market reforms intended to reduce clearing times, increase activity, and benefit local investors....