Global index provider, FTSE Russell has suspended Nigeria's planned reclassification to Frontier Market status following the country's recent transition to a T+1 securities settlement cycle, delaying what was expected to be a significant boost for the nation's capital market.

Nigeria had been scheduled to regain Frontier Market status in September 2026 after FTSE Russell announced the planned upgrade during its March 2026 Semi-Annual Country Classification Review.

However, the index provider said it would carry out further assessment of the country's new settlement framework before implementing the upgrade. The review follows Nigeria's adoption of the T+1 settlement cycle on June 1, 2026, under which securities transactions are completed one business day after trade execution, replacing the previous T+2 system.

In a statement, FTSE Russell said the shorter settlement period requires additional evaluation to determine its impact on international investors and whether the market continues to meet the accessibility standards required for Frontier Market classification.

According to the organisation, the move to T+1 could effectively make Nigeria a prefunded market for many foreign institutional investors, requiring them to have funds available before executing trades.

FTSE Russell noted that it would announce its final decision on Nigeria's classification by the end of August 2026. The delay represents a setback for Nigeria's efforts to attract more foreign portfolio investment through global equity indices.

A return to Frontier Market status is expected to increase the country's visibility among international investors and index-tracking funds, potentially driving fresh capital inflows into the Nigerian Exchange (NGX).

Despite the postponement, market stakeholders maintain that the adoption of the T+1 settlement system is a progressive reform aimed at improving market efficiency, reducing settlement risk and aligning Nigeria's capital market with emerging global best practices.

The Association of Securities Dealing Houses of Nigeria (ASHON) criticised FTSE Russell's decision, arguing that the T+1 settlement framework strengthens the Nigerian market rather than diminishes its attractiveness.

The association urged the global index provider to recognise the long-term benefits of the reform for investors and market development. The development comes as Nigeria's equities market continues to navigate increased volatility amid profit-taking by investors after months of strong gains.

Analysts say the outcome of FTSE Russell's review, expected in August, will be closely watched by both domestic and international investors, as it could significantly influence foreign capital inflows and overall market sentiment.