The Securities and Trade Fee (SEC) has clarified that fund and portfolio managers will likely be required to carry 0.1% of Property Beneath Administration (AUM) as regulatory capital and never 10% as initially said in its January 16, 2026, round.
That is in response to dependable sources throughout the SEC who confirmed the correction to Nairametrics, following sturdy suggestions from capital market operators.
SEC DG, Dr. Emomotimi Agama can also be anticipated to make this clarification official subsequent week.
The clarification considerably lowers the capital burden for big asset managers and averts what trade leaders feared may destabilise the funding administration panorama.
What the info is saying
As a part of its sweeping regulatory reforms, the SEC raised capital thresholds throughout nearly all capital market classes.
- Fund and portfolio managers underneath the Tier 1 class are actually required to carry N5 billion in capital, with an extra 0.1% of AUM for corporations managing over N100 billion.
- The Fee initially said the AUM-linked rule as 10%, which might have required a agency like Stanbic IBTC Asset Administration, with over N11 trillion in AUM, to boost N1.1 trillion in regulatory capital.
- This might have been method greater than the regulatory capital Nigeria’s greatest banks who carry extra danger weighted belongings.
- With the correction to 0.1%, the brand new requirement drops to N11 billion.
Different operators are additionally impacted: brokers (N600 million), sellers (N1 billion), broker-dealers (N2 billion), issuing homes (N2 billion–N7 billion relying on scope), and digital asset platforms (N2 billion). The implementation deadline is June 30, 2027.
Pushback from operators and requires overview
Whereas the SEC’s targets of strengthening investor safety and enhancing market resilience had been broadly welcomed, operators described the capital hikes—particularly for fund managers—as aggressive.
An in depth coverage memorandum titled “Evaluation of Tier 1 Fund and Portfolio Administration Capital Necessities,” seen by Nairametrics, argues that the mixture of a N5 billion minimal and the (now corrected) 10% AUM rule was out of step with trade economics and international benchmarks.
It notes that fund managers are fiduciary brokers, not risk-takers like banks, and subsequently shouldn’t be subjected to capital guidelines designed for principal-based establishments.
The report additionally makes use of monetary modelling to indicate how the capital necessities may render the asset administration enterprise economically unattractive.
A Tier 1 supervisor with N50 billion in AUM and a 1.5% administration payment would earn about N750 million in income, leading to a revenue of roughly N350 million. That equates to only a 7% return on N5 billion capital—properly under the risk-free charge in Nigeria.
For even bigger managers, the consequence is identical: low returns on capital, even with environment friendly operations. The report warns that this may occasionally discourage scale, encourage asset fragmentation, and finally weaken competitors within the trade.
Why this issues
The SEC’s correction of the AUM capital rule from 10% to 0.1% is a important course adjustment. It ensures the Fee’s targets—market stability and investor safety—stay intact with out jeopardising the viability of top-tier fund managers.
The preliminary model of the rule risked pushing corporations to restructure, downsize, or artificially cap their progress to keep away from steep regulatory prices.
The correction additionally brings Nigeria nearer to worldwide observe. International markets such because the UK, US, EU, and Australia usually apply capital necessities linked to operational danger or fastened overheads—to not the total worth of consumer belongings underneath administration. Analysts say the revised rule is extra proportionate and reduces the chance of capital misallocation within the sector.
Nonetheless, considerations stay over the flat N5 billion flooring for Tier 1 managers, which some argue may nonetheless favour massive, bank-affiliated corporations and cut back range within the trade. Requires a extra risk-sensitive, graduated mannequin are anticipated to persist as implementation approaches.
What it’s best to know
Nairametrics understands that SEC Director-Common, Dr. Emomotimi Agama, is anticipated to publicly make clear and ensure these adjustments throughout a stakeholder briefing scheduled for subsequent week.
This follows days of consultations between the Fee and trade operators, and rising considerations in regards to the potential impression of the unique capital framework.
The SEC’s capital revision, introduced in mid-January, is a part of a broader regulatory reform that additionally consists of the formal integration of fintechs, digital asset platforms, and new market infrastructure gamers into the capital market construction.
As implementation progresses towards the 2027 deadline, the main target will shift to how corporations adapt and whether or not additional regulatory fine-tuning will observe.
