The Securities and Exchange Commission (SEC) has proposed a new regulatory framework for online forex trading and Contracts for Difference (CFDs), including minimum capital requirements of up to N5 billion for operators targeting Nigeria’s retail trading market.
The proposed framework, issued under the Investments and Securities Act (ISA) No. 2, 2025, is contained in the SEC’s draft Rules on Online Forex Trading and Contracts for Difference (CFD), published on Tuesday, September 1.
The rules seek to bring both Nigerian and offshore operators serving Nigerian residents under a formal licensing and supervisory regime, while introducing a minimum 30% Nigerian ownership requirement for licensed brokers.
Under the proposed framework, operators would be divided into three principal licensing categories: Online Forex Broker/Broker Dealer, Introducing Broker, and Technology/Platform Provider.
B-Book or market-making forex brokers would be required to have a minimum paid-up capital of N3 billion and minimum liquid capital of N2.4 billion or 10% of total liabilities, whichever is higher.
A-Book brokers, including Straight-Through-Processing (STP) and Electronic Communication Network (ECN) operators, would require minimum paid-up capital of N2 billion and liquid capital of N1.6 billion or 10% of total liabilities, whichever is higher.
Technology and platform providers would face the highest capital threshold at N5 billion. Corporate Introducing Brokers would require N150 million, while individual Introducing Brokers would need N30 million in capital.
Other Provisions
The SEC is also proposing registration fees ranging from N1 million for individual Introducing Brokers to N30 million for Technology/Platform Providers. These would be in addition to a N100,000 application fee and N300,000 processing fee.
The draft rules would also impose a local ownership requirement on licensed entities. 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 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 SEC proposes to prevent operators from circumventing the ownership requirement through nominees, trusts or similar arrangements. This could make it difficult for offshore brokers to meet the requirement simply by incorporating a Nigerian subsidiary without meeting the prescribed ownership structure.
The proposed rules would also extend the SEC’s regulatory reach to offshore forex and CFD platforms that actively target Nigerian residents. A foreign operator could fall within the SEC’s regulatory perimeter if it lists Nigeria among its supported countries, permits Nigerians to open trading accounts, markets its services to Nigerian residents through local affiliates or influencers, or maintains representatives or customer-support channels in Nigeria.
The framework proposes tighter controls over how client funds are handled. Brokers would be required to hold customer funds in segregated accounts with CBN-licensed banks, reconcile the accounts daily and retain relevant records for at least seven years.
Transparency Provisions
Retail leverage would also be restricted. The proposed limits are 1:400 for major currency pairs, 1:300 for minor and exotic currency pairs as well as CFDs on indices and commodities, and 1:2 for cryptocurrency CFDs. Professional clients could access leverage of up to 1:1,000, subject to meeting eligibility requirements under the proposed rules.
Retail traders would receive negative-balance protection, while brokers would be required to automatically close positions once a client’s equity falls to 50% or less of the required margin. The SEC also proposes to prohibit brokers from offering, marketing or facilitating trading in currency pairs involving the naira without prior approval from the Commission.
In a further transparency requirement, CFD brokers would have to disclose monthly the percentage of their retail accounts that lose money. Advertising materials and influencer promotions would also have to be filed with the SEC for approval.
The draft rules would prohibit bonuses, trading contests, referral incentives and Percentage Allocation Management Model (PAMM) arrangements. Binary options would also be prohibited for retail clients.
Technology and platform providers would face operational and cybersecurity requirements, including minimum platform uptime of 99.5%, end-to-end encryption and multi-factor authentication. Material cybersecurity incidents would have to be reported to the SEC within 24 hours. CFD brokers would also be required to submit a Daily Price Spread Report to the SEC by 10:00 a.m. West African Time on the next business day (T+1).
The proposed framework further provides for the participation of regulated entities in funding an Investor Protection Fund in accordance with the Investments and Securities Act 2025.
The SEC’s proposed rules represent a significant attempt to formalise Nigeria’s retail online forex and CFD market, particularly as Nigerian traders increasingly use digital platforms operated by both domestic and foreign brokers.
