CBN Expands Access to Open Market Operations, Allows Non-Banks to Participate
The Central Bank of Nigeria (CBN) has widened participation in its Open Market Operations (OMO), allowing a broader range of financial market participants to trade in eligible securities.
Under the new arrangement, individuals, corporate organisations and non-bank financial institutions can participate in OMO activities, alongside conventional banks.
The move represents a significant change in access to one of the CBN’s key monetary policy instruments and could provide more participants with opportunities to engage directly with the Nigerian money market.
CBN reopens tenored repo operations
The apex bank has also lifted its suspension of tenored repurchase agreement, or repo, operations.
Under the revised framework, the CBN can provide liquidity to eligible market participants for periods ranging from four to 90 days.
Repo transactions are commonly used by central banks and financial institutions to manage short-term liquidity. The renewed facility therefore gives the CBN another mechanism for influencing liquidity conditions within the financial system.
The changes were contained in a circular issued by the central bank late Wednesday.
Wider access to CBN discount window
The CBN also removed restrictions on access to its discount window for participants involved in the foreign exchange market and government securities auctions.
The discount window provides an avenue through which eligible financial institutions can obtain short-term liquidity from the central bank, subject to applicable conditions.
By broadening access, the latest policy adjustments could increase the range of participants able to interact with the CBN through its liquidity and monetary policy operations.
What the changes mean for Nigeria’s financial market
The expansion of OMO participation could deepen activity in Nigeria’s financial markets by bringing more investors and institutions into transactions involving central bank securities.
For individuals and corporate investors, wider participation could create additional opportunities to access money-market instruments. Non-bank financial institutions may also gain greater flexibility in managing their liquidity and investment positions.
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The decision to resume tenored repo operations also gives the CBN greater room to influence liquidity over different periods, from short four-day facilities to arrangements lasting as long as 90 days.
The latest measures come as the central bank continues to use monetary policy tools to manage liquidity and maintain stability across Nigeria’s financial system.
Market participants will be watching how the expanded eligibility rules affect demand for securities, liquidity conditions and activity across the foreign exchange and government bond markets.
