SEC Orders Two-Year Transition To Market-Based Bond Valuation

The Securities and Exchange Commission has approved a two-year transition period, beginning September 22, 2025, for fund managers to fully adopt mark-to-market valuation of fixed income securities.

This trend means that rather than valuing bonds at their purchase price (amortised cost), managers will progressively begin to value them at their current market price, reflecting the assets’ real-time worth.

As part of the transition, the SEC has also granted temporary forbearance on asset-allocation rules.

Normally, funds must maintain a 70:30 ratio between mark-to-market and amortized cost, but for the next two years managers can work with a more flexible 50:50 balance to ease adjustment.

However, all new fixed-income purchases must be valued on a mark-to-market basis immediately.

The SEC has instructed each fund manager to provide an implementation plan by October 2, 2025, outlining their strategy for achieving complete compliance prior to the end of the grace period, in order to guarantee compliance.

The regulator also said that it will collaborate with the Fund Managers Association of Nigeria and other stakeholders to launch investor education programs aimed at helping the investing public understand the changes.