January 19, (THEWILL) — The Securities and Exchange Commission (SEC) has clarified that fund and portfolio managers will be required to hold 0.1% of Assets Under Management (AUM) as regulatory capital and not 10% as initially stated in its January 16, 2026, circular.
The clarification significantly lowers the capital burden for large asset managers and averts what industry leaders feared could destabilise the investment management landscape.
As part of its sweeping regulatory reforms, the SEC raised capital thresholds across virtually all capital market categories. Fund and portfolio managers under the Tier 1 category are now required to hold N5 billion in capital, with an additional 0.1% of AUM for firms managing over N100 billion. The Commission initially stated the AUM-linked rule as 10%, which would have required a firm like Stanbic IBTC Asset Management, with over N4 trillion in AUM, to raise N400 billion in regulatory capital.
This would have been way more than the regulatory capital of Nigeria’s regional banks who carry more risk-weighted assets. With the correction to 0.1%, the new requirement drops to N11 billion.
Other operators are also impacted: brokers (N600 million), dealers (N1 billion), broker-dealers (N2 billion), issuing houses (N2 billion–N7 billion depending on scope), and digital asset platforms (N2 billion). The implementation deadline is June 30, 2027. While the SEC’s goals of strengthening investor protection and improving market resilience were broadly welcomed, operators described the capital hikes—especially for fund managers—as aggressive.
The SEC’s correction of the AUM capital rule from 10% to 0.1% is a critical course adjustment. It ensures the Commission’s objectives—market stability and investor protection—remain intact without jeopardising the viability of top-tier fund managers.
The initial version of the rule risked pushing firms to restructure, downsize, or artificially cap their growth to avoid steep regulatory costs. The correction also brings Nigeria closer to international practice. Global markets such as the UK, US, EU, and Australia typically apply capital requirements linked to operational risk or fixed overheads—not to the full value of client assets under management.
Stakeholders consider the revised rule appropriate and addresses what had been considered inimical to the critical success factor of the revised policy.
However, concerns remain over the flat N5 billion floor for Tier-1 managers, which some argue could still favour large, bank-affiliated firms and reduce diversity in the industry.
