The Securities and Exchange Commission (SEC) has proposed a new regulatory framework for online foreign exchange trading and Contracts for Difference (CFDs), with capital requirements of up to N5 billion for operators seeking to participate in Nigeria’s retail forex market.
The proposed rules are contained in the draft Rules on Online Forex Trading and Contracts for Difference, published on September 1, 2026.
The framework is being introduced under the Investments and Securities Act (ISA) No. 2, 2025, which was signed into law in March 2025.
The proposed regulations seek to bring both Nigerian and offshore operators targeting residents in the country under a formal licensing and supervisory structure.
The SEC is also proposing a minimum local ownership requirement for licensed forex brokers, with at least 30 per cent of their issued and paid-up share capital to be held directly and continuously by Nigerian citizens who serve as directors of the company.
Three Licence Categories
Under the proposed framework, online forex operators would be classified into three major categories: Online Forex Broker or Broker Dealer, Introducing Broker, and Technology or Platform Provider.
B-Book or market-making forex brokers would be required to have a minimum paid-up capital of N3 billion.
They would also need to maintain minimum liquid capital of N2.4 billion or 10 per cent of total liabilities, whichever is higher.
For Straight-Through-Processing (STP) and Electronic Communication Network (ECN) brokers, also known as A-Book brokers, the proposed minimum paid-up capital is N2 billion.
Such operators would be required to maintain minimum liquid capital of N1.6 billion or 10 per cent of total liabilities, whichever is higher.
Technology and platform providers would face the highest capital threshold, with a proposed minimum paid-up capital of N5 billion.
The draft rules also set capital requirements for introducing brokers. Corporate Introducing Brokers would require N150 million, while individual Introducing Brokers would need N30 million.
In addition to the capital requirements, registration fees would range from N1 million for individual Introducing Brokers to N30 million for Technology and Platform Providers.
Applicants would also be required to pay a N100,000 application fee and a N300,000 processing fee.
Local Ownership and Nigerian Directors
The SEC’s proposed local ownership requirement is designed to ensure that licensed entities maintain a meaningful Nigerian presence.
Under the draft rules, at least 30 per cent of a broker’s issued and paid-up share capital must be held directly and continuously by Nigerian citizens who are directors of the company.
The framework also requires at least two directors, including the Managing Director or Chief Executive Officer, to be resident in Nigeria.
The proposed ownership structure cannot be achieved through nominees, trusts or other arrangements intended to bypass the requirement.
This provision could affect offshore forex brokers that currently serve Nigerian clients, as simply establishing a Nigerian subsidiary may not be sufficient to meet the proposed ownership conditions.
Stronger Investor Protection Measures
The proposed rules include several measures aimed at strengthening investor protection and improving transparency in the retail forex market.
Client funds would have to be held in segregated accounts with banks licensed by the Central Bank of Nigeria (CBN).
These accounts would be subject to daily reconciliation, while records would be required to be retained for at least seven years.
All regulated entities would also be expected to jointly fund an Investor Protection Fund in line with the ISA 2025.
CFD brokers would be required to submit a Daily Price Spread Report to the SEC by 10:00 a.m. West Africa Time on the next business day.
The rules would also require brokers to disclose, on a monthly basis, the percentage of their retail accounts that lose money.
In addition, all advertising and influencer promotions would have to be filed with the SEC for approval.
Proposed Leverage Limits
The draft framework proposes limits on the amount of leverage available to retail forex traders.
Leverage would be capped at 1:400 for major currency pairs and 1:300 for minor and exotic currency pairs, as well as CFDs on indices and commodities.
For cryptocurrency trading, the proposed retail leverage limit is 1:2.
Professional clients, subject to eligibility requirements, could access leverage of up to 1:1,000.
The SEC is also proposing restrictions on brokers offering, marketing or facilitating trading in currency pairs involving the naira without prior approval from the commission.
Implications for Forex Operators
If adopted, the proposed framework would significantly change the operating environment for online forex brokers, introducing brokers and technology providers targeting Nigerian traders.
The higher capital requirements could raise the entry barrier for new operators, while the local ownership provisions may require some offshore businesses to reconsider their existing structures.
The proposed leverage limits and mandatory disclosure of losing retail accounts could also affect how brokers market their services and attract new clients.
However, the rules are still at the proposal stage. The final requirements, implementation timelines and possible amendments will depend on the SEC’s regulatory process.
The proposed framework represents an effort to formalise Nigeria’s retail forex market, improve oversight and provide greater protection for investors participating in online trading.
