The Securities and Change Fee (SEC) has clarified that fund and portfolio managers shall be required to carry 0.1% of Property Below Administration (AUM) as regulatory capital and never 10% as initially acknowledged in its January 16, 2026, round.
That is in accordance with dependable sources throughout the SEC who confirmed the correction to Nairametrics, following robust suggestions from capital market operators.
SEC DG, Dr. Emomotimi Agama, can be anticipated to make this clarification official subsequent week.
The clarification considerably lowers the capital burden for big asset managers and averts what business leaders feared might destabilise the funding administration panorama.
What the information 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 at the moment are required to carry N5 billion in capital, with a further 0.1% of AUM for companies managing over N100 billion.
- The Fee initially acknowledged the AUM-linked rule as 10%, which might have required a agency like Stanbic IBTC Asset Administration, with over N4 trillion in AUM, to boost N400 billion in regulatory capital.
- This is able to have been far more than the regulatory capital of Nigeria’s regional banks who carry extra risk-weighted property
- 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 evaluate
Whereas the SEC’s targets of strengthening investor safety and bettering market resilience had been broadly welcomed, operators described the capital hikes—particularly for fund managers—as aggressive.
- An in depth coverage memorandum titled “Assessment 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 business 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 point out how the capital necessities might 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 beneath the risk-free fee in Nigeria.
For even bigger managers, the outcome is identical: low returns on capital, even with environment friendly operations. The report warns that this will discourage scale, encourage asset fragmentation, and in the end weaken competitors within the business.
Why this issues
The SEC’s correction of the AUM capital rule from 10% to 0.1% is a vital course adjustment. It ensures the Fee’s aims—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 companies to restructure, downsize, or artificially cap their progress to keep away from steep regulatory prices.
- The correction additionally brings Nigeria nearer to worldwide follow. International markets such because the UK, US, EU, and Australia usually apply capital necessities linked to operational danger or mounted overheads—to not the total worth of shopper property underneath administration.
- Analysts say the revised rule is extra proportionate and reduces the chance of capital misallocation within the sector.
Nonetheless, issues stay over the flat N5 billion flooring for Tier 1 managers, which some argue might nonetheless favour massive, bank-affiliated companies and scale back range within the business.
Requires a extra risk-sensitive, graduated mannequin are anticipated to persist as implementation approaches.
What it is best to know
Nairametrics understands that SEC Director-Normal, Dr. Emomotimi Agama, is predicted to publicly make clear and make sure these adjustments throughout a stakeholder briefing scheduled for subsequent week.
This follows days of consultations between the Fee and business operators, and rising issues concerning the potential influence 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 focus will shift to how companies adapt and whether or not additional regulatory fine-tuning will comply with.
Editor’s word: This text has been up to date to right the property underneath administration (AUM) of Stanbic IBTC Asset Administration, which is roughly N4 trillion and never N11 trillion as earlier acknowledged. The preliminary determine inadvertently mixed the AUM of Stanbic IBTC Asset Administration with that of Stanbic IBTC Pensions.
