In furtherance of its regulatory mandate to boost the performance of the Nigerian capital market, the Securities and Exchange Commission (SEC) on Tuesday released a draft regulatory framework for online forex trading and Contracts for Difference (CFDs), setting minimum capital requirements of up to N5 billion for operators seeking to participate in Nigeria’s retail forex market.
The draft regulatory framework’s rules, which were issued under the Investments and Securities Act (ISA) No. 2, 2025, are contained in the draft ‘Rules on Online Forex Trading and Contracts for Difference’, seek to bring both domestic and offshore operators targeting Nigerian residents into a formal licensing and supervisory framework, alongside a proposed 30% minimum local ownership requirement for licensed brokers.
Specifically designed to apply not only to operators incorporated in Nigeria but also to offshore entities that target Nigerian residents, the draft framework creates three licence categories, namely Online Forex Broker/Broker Dealer, Introducing Broker, and Technology/Platform Provider, each with its own capital threshold.
According to the SEC, the B-Book or market-making forex brokers will require a minimum paid-up capital of N3 billion, alongside minimum liquid capital of N2.4 billion or 10% of total liabilities, whichever is higher, while Straight-Through-Processing (STP) and Electronic Communication Network (ECN) brokers or A-Book brokers would require N2 billion in paid-up capital, with minimum liquid capital of N1.6 billion or 10% of total liabilities, whichever is higher.
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Also, Technology and platform providers would face the highest minimum capital requirement of any category, at N5 billion just as Corporate Introducing Brokers would require N150 million, while individual Introducing Brokers would require N30 million.
Under the draft framework, the proposed Registration fees range from N1 million for individual Introducing Brokers to N30 million for Technology/Platform Providers, on top of a N100,000 application fee and a N300,000 processing fee. The proposed rules also introduce a minimum Nigerian ownership requirement for licensed entities.
In addition, the draft framework provides that at least 30% of a broker’s issued and paid-up share capital would have to be held directly and continuously by Nigerian citizens who serve as directors of the company, with at least two directors, including the Managing Director/Chief Executive Officer, who is required to be resident in Nigeria.
The SEC further proposed in the draft framework that this ownership cannot be routed through nominees, trusts or other arrangements designed to circumvent the requirement, meaning offshore brokers may not be able to satisfy the rule by simply setting up a Nigerian subsidiary.
Another key provision of the proposed framework is its explicit reach into offshore platforms serving Nigerian residents. A foreign broker could fall within the SEC’s regulatory perimeter where it lists Nigeria as a supported country, allows Nigerians to open trading accounts, markets to Nigerian residents using local affiliates or influencers, or maintains representatives or customer-support channels in the country.
The draft rules contained several other provisions aimed at tightening the retail forex market. For instance Client funds would have to be held in segregated accounts at CBN-licensed banks, reconciled daily and retained for at least seven years while Retail leverage would be capped at 1:400 for major currency pairs, 1:300 for minor/exotic pairs and CFDs on indices and commodities, and 1:2 for cryptocurrencies — with professional clients able to access up to 1:1,000 subject to eligibility criteria.
Similarly, the draft framework provides that retail clients would get negative-balance protection and a mandatory close-out of positions once equity falls to 50% or less of required margin; and that brokers would be barred from offering, marketing or facilitating trading in currency pairs involving the Naira without prior SEC approval.
The draft rules also stipulated that brokers would have to disclose monthly the percentage of retail accounts that lose money, and file all advertising and influencer promotions with the SEC for approval just as bonuses, trading contests, referral incentives and the Percentage Allocation Management Model (PAMM) would be prohibited, as would binary options for retail clients.
The draft framework also indicated that technology/platform providers would be required to maintain at least 99.5% platform uptime, use end-to-end encryption and multi-factor authentication, and report material cybersecurity incidents within 24 hours.
This is even as it provided that a Daily Price Spread Report would be required from every CFD broker by 10:00 a.m. WAT (West African Time) the next business day (T+1), and all regulated entities would jointly fund an Investor Protection Fund in line with the ISA 2025.
If the draft framework is finally approved, existing and informal operators would be given three months to submit a complete registration application once the rules take effect, and six months to fully comply with registration requirements, and operators that fail to apply within the stipulated window would be required to cease regulated activities.
Through the proposed rules, the SEC intends to further apply the provisions of the Investment and Securities Act 2025, which make it an offence for any entity to operate an online forex trading platform or digital asset exchange in Nigeria without SEC registration, giving the Commission the legal backing for the more detailed rules now being proposed.
It would be recalled that over the past months, the commission has been warning Nigerians against dealing with unregistered forex and crypto platforms in view of the associated risks to such illegal transactions, including through a public notice in May 2026 in which it denounced unregistered investment schemes promoted on WhatsApp, Instagram, TikTok and other social media platforms,
The Commission has consistently enlightened the investing public that Section 196(3) of the ISA 2025 criminalised the promotion and operation of unregistered investment schemes, with violations punishable by a fine of not less than N20 million or imprisonment.
The proposed forex regulatory framework is coming as the SEC continued to pursue a broader push to deepen market participation.
For instance, the Commission recently inaugurated a Capital Market Working Group on Market Liquidity with a view to attracting 20 million new investors to the capital market through technology-driven solutions.
This is even as it has initiated plans to encourage more investors currently going into unregulated trading into licensed, regulated instruments, among other steps targeted at sustainably boosting the performance of the Nigerian capital market.
