Nigeria’s planned return to the FTSE Russell Frontier Market Index has hit a fresh obstacle after the global index provider paused the country’s reclassification, citing concerns that a new stock settlement rule could make investing more difficult for international investors.
The London-based index provider said Tuesday that Nigeria’s planned upgrade from “Unclassified” to “Frontier Market,” scheduled to take effect in September, is now under further review following the country’s transition to a T+1 settlement cycle.
FTSE Russell said the shorter settlement period may effectively require international institutional investors to pre-fund equity trades before transactions are completed, weakening one of the key market quality standards used in its country classification framework.
The organisation said it will announce the outcome of its review by the end of August.
The decision is an unexpected setback for Nigeria, which only secured approval for its return to the Frontier Market category in March after spending nearly three years outside the index.
