The Securities and Exchange Commission (SEC) has directed fund managers to begin valuing bonds based on prevailing market prices rather than their original purchase cost.
The SEC disclosed this to Reuters on Monday.
Mark-to-market (MTM) accounting is a valuation method that values assets and liabilities based on what they could be bought or sold for in today’s marketplace, rather than their original price.
The SEC said the move is intended to boost transparency and align the country’s capital market with global standards.
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The directive, known as mark-to-market (MTM) valuation, is expected to improve pricing accuracy and liquidity in fixed-income markets, while also making Nigerian assets more comparable to international benchmarks.
Niyi Falade, executive director at Custodian Investment Plc, told Reuters that “fund prices could now fluctuate with the market, which means potential losses that weren’t visible before”.
“Bond prices haven’t reflected market movements, but with this change, there will be ups and downs as interest rates shift,” he added.
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Under the new rules, the regulator said fund managers have until September 2027 to fully transition to MTM accounting.
During the grace period, Reuters said the SEC has allowed a temporary relaxation of asset-allocation rules, permitting a 50:50 split between MTM and amortised cost methods, compared with the standard 70:30 ratio.
All new bond purchases, however, must be valued immediately using the MTM approach, according to the commission.
The regulator has also asked all fund managers to submit an implementation plan by October 2, 2025, outlining how they intend to comply with the new framework.
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