The Central Bank of Nigeria (CBN) has removed restrictions on Deposit Money Banks’ (DMBs) access to its discount window/Standing Lending Facility (SLF)that arise from lenders’ participation in the Nigerian Foreign Exchange Market (NFEM) and primary auctions of government securities.
In a circular signed by its Acting Director, Financial Markets Department, Okey Umeano, on Wednesday, the apex bank also announced that it has lifted the suspension of Tenored Repo Operations.
The CBN said that the changes, which take immediate effect, are part of its review of existing market practices and developments in the foreign exchange, money and fixed-income markets, as well as its review of the framework, “governing access to the Standing Lending Facility (SLF), Tenored Repo Operations and participation in Open Market Operations (OMO).”
It, however, said that the existing restriction on participation in OMO auctions by institutions accessing the discount window on the same day remain in force.
With the lifting of the suspension of tenored repo operations, the circular said the, “CBN may conduct repo operations across approved tenors ranging from 4 to 90 days to support effective liquidity management, improve money market functioning and enhance monetary policy implementation.”
On its review of the OMO participation framework, the CBN said that the move is to allow a broader range of investors to participate in both primary and secondary OMO markets through DMBs.
“OMO participation (primary and secondary markets) shall be open to all eligible investorsthrough Deposit Money Banks (DMBs). Eligible investors include individuals, corporate and non-bank financial institutions. DMBs shall continue to submit bids and settle transactions on behalf of their customers,” the circular said.
It further stated that “the volume, tenor and frequency of OMO issuances shall continue to be determined by the CBN in line with prevailing liquidity conditions and monetary policy objectives,” adding that, “OMO auctions shall continue to be conducted using the existing single-bid auction format.”
According to the circular: “All banks, authorised dealers and market participants are required to ensure strict compliance.”
