LAGOS (Nigeria): Fund managers have received a directive from Nigeria’s Securities and Exchange Commission (SEC) to adopt mark-to-market (MTM) valuation for fixed income securities, shunning the traditional hold-to-maturity model.
Set to be fully implemented by Sept. 2027, the shift aims to allow for transparency, aligning asset pricing with prevailing market conditions.
By the MTM approach, bonds should be valued based on current market prices, rather than their original purchase cost.
This move is expected to improve comparability with global benchmarks and support more accurate pricing and liquidity assessments.
During the transition period, the SEC will permit a temporary 50:50 split between MTM and amortised cost methods—adjusting the current 70:30 ratio. However, all new bond acquisitions must be valued immediately using the MTM framework. Fund managers are required to submit detailed implementation plans by October 2.
Analysts caution that it could introduce volatility for investors, even though the directive is seen as a step toward modernising Nigeria’s capital markets.
“This change means fund values will now reflect market swings, including potential losses that were previously hidden,” said Niyi Falade, Executive Director at Custodian Investment Plc.
The reform is part of broader economic policy shifts under President Bola Tinubu‘s administration, which has included currency liberalisation and the removal of fuel subsidies—measures that have sparked renewed interest from global investors.
