SEC Moves To Tighten Online Forex Market, Proposes N3bn Capital Floor For Brokers

The Securities and Exchange Commission (SEC) is seeking to raise the bar for participation in Nigeria’s online foreign exchange market, proposing capital requirements of up to N5 billion and new ownership conditions for operators serving retail traders.

The proposal is contained in the regulator’s draft Rules on Online Forex Trading and Contracts for Difference (CFDs), issued under the Investments and Securities Act 2025.

The framework would if adopted, bring both Nigerian companies and foreign platforms targeting residents into the SEC’s licensing and supervisory regime.

Under the proposed structure, market-making, or B-Book, forex brokers would need paid-up capital of at least N3 billion, while Straight-Through-Processing and Electronic Communication Network brokers would require N2 billion. Technology and trading platform providers would face the highest threshold, at N5 billion.

The SEC is also proposing a minimum Nigerian ownership component for licensed brokers. At least 30 percent of issued and paid-up share capital would have to be held directly and continuously by Nigerian citizens who are directors of the company.

At least two directors, including the managing director or chief executive officer, would also be required to reside in Nigeria.

The requirement is designed to prevent operators from using nominal local structures to satisfy the rules, as the proposed Nigerian ownership cannot be created through nominees, trusts or similar arrangements.

Foreign operators would not automatically escape the framework by remaining incorporated outside Nigeria. The SEC proposes that an offshore platform could come under its jurisdiction if it accepts Nigerian customers, identifies Nigeria as a supported market, advertises directly to Nigerians, uses local affiliates or influencers, or maintains representatives or customer-support operations in the country.

The draft also places tighter controls on how retail customers are protected and marketed to. Client funds would have to be kept separately from brokers’ own money in accounts with CBN-licensed banks, while brokers would be required to reconcile such accounts daily and preserve records for seven years.

The SEC also proposes negative-balance protection and compulsory closure of positions when a retail client’s equity falls to 50 percent or less of the required margin.

To curb aggressive customer acquisition, brokers would be required to obtain approval for advertisements and influencer campaigns and disclose monthly how many retail accounts lose money. Bonuses, trading contests, referral incentives and PAMM arrangements would also be prohibited for retail customers.

Existing and informal operators would have three months after the rules take effect to submit registration applications and six months to complete the compliance process. Those that fail to enter the framework would be required to stop regulated activities.

The rules remain proposals and are not yet in force.