In a major regulatory shift aimed at curbing illicit platforms and protecting retail investors, Nigeria’s Securities and Exchange Commission (SEC) has issued draft rules introducing strict minimum capital benchmarks for online foreign exchange (FX) brokers and Contracts for Difference (CFD) operators.
The proposed framework, issued under the Investments and Securities Act (ISA) 2025, seeks to bring both domestic brokers and offshore platforms targeting Nigerian residents into a formal licensing regime.
Breakdown of Proposed Capital Requirements
The draft rules establish clear licensing categories with distinct capital thresholds:
- Market-Making (B-Book) Forex Brokers: Minimum paid-up capital of ₦3 billion. Operators must also maintain liquid capital of at least ₦2.4 billion or 10% of total liabilities (whichever is higher) unimpaired by losses.
- Straight-Through Processing / ECN (A-Book) Brokers: Minimum paid-up capital of ₦2 billion, alongside liquid capital of at least ₦1.6 billion or 10% of liabilities.
- Technology & Platform Providers: Minimum paid-up capital of ₦5 billion.
- Introducing Brokers: ₦150 million for corporate entities and ₦30 million for individual brokers.
Mandated Local Ownership & Foreign Platform Scope
To prevent regulatory arbitrage, the SEC has introduced stringent local participation and jurisdiction rules:
- 30% Local Ownership Rule: At least 30% of a licensed broker’s paid-up share capital must be held directly and continuously by Nigerian citizens who serve as directors, with at least two resident directors (including the CEO). The SEC explicitly barred proxy or nominee arrangements to bypass this requirement.
- Offshore Platforms Covered: Foreign platforms that accept Nigerian accounts, market via local influencers, accept Naira, or maintain local support agents will be legally required to acquire formal SEC licenses.
Retail Investor Safeguards
- Leverage Caps: Leverage for retail clients will be capped at 1:400 for major currency pairs and 1:2 for cryptocurrency pairs.
- Negative-Balance Protection: Mandatory safeguards preventing retail traders from losing more than their account equity, with automated position close-outs triggered when account equity drops to 50% or below.
- Segregated Funds: Operators must hold client funds in segregated accounts with licensed Nigerian commercial banks, subject to daily reconciliation.
Existing and informal operators will have three months to apply once the rules are finalized, followed by a six-month window to achieve full operational compliance.
