FTSE Russell Puts Nigeria Frontier Market Reclassification Under Review on T+1 Concerns

 

FTSE Russell, An LSEG Business has placed its planned reclassification of Nigeria to Frontier market status under further review, citing potential operational challenges for international investors stemming from the country’s recent shift to a T+1 settlement cycle.

The index provider confirmed in March 2026 that Nigeria would move from “Unclassified” to Frontier status effective Sept. 21, 2026, after the country met all five FTSE Quality of Markets criteria following improvements in foreign-exchange liquidity and capital repatriation.

In a statement Tuesday, FTSE Russell said it is now assessing the implications of Nigeria’s June 1 transition from T+2 to T+1 settlement. The shorter cycle could effectively require pre-funding of equity trades for foreign institutional investors, which the provider views as a negative factor under its “Settlement Cycle (DvP)” criterion.

 “Consequently, the reclassification of Nigeria is under further review to assess the implications of the transition to a T+1 settlement cycle for international institutional investors,” FTSE Russell said. “FTSE Russell will provide an update on the status of Nigeria’s potential reclassification to Frontier market status by the end of August 2026.”

Nigeria was downgraded to Unclassified in September 2023 after persistent FX repatriation issues made the market inaccessible for many global investors. The planned upgrade had been hailed as a vote of confidence in reforms under President Bola Tinubu, potentially opening the door to passive inflows from funds tracking FTSE Frontier indices.

Market participants in Nigeria have defended the T+1 migration, which aligns the Nigerian Exchange with global best practices and aims to reduce counterparty risk — as a net positive, even as it introduces transitional considerations for cross-border participants.

The review introduces near-term uncertainty for Nigerian equities, which had anticipated a boost from index inclusion. A final decision is expected before the September implementation window.