CBN Removes FX and Government Securities Restrictions on Discount Window Access

The Central Bank of Nigeria (CBN) has eased access to its Standing Lending Facility (SLF) for banks by removing restrictions previously tied to their participation in the Nigerian Foreign Exchange Market (NFEM) and primary auctions of government securities. This move aims to streamline liquidity management for financial institutions.

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Restrictions on access to the Discount Window arising from participation in the Nigerian Foreign Exchange Market (NFEM) are hereby removed.

In a circular signed by Okey Umeano, Acting Director of the Financial Markets Department, the CBN stated that these changes follow an assessment of current market practices in the foreign exchange, money, and fixed-income sectors. However, the existing restriction preventing institutions from accessing the Discount Window and participating in Open Market Operations (OMO) on the same day will remain in effect.

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The suspension of Tenored Repo Operations is hereby lifted. Accordingly, 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.

Furthermore, the CBN announced the lifting of the suspension on Tenored Repo Operations. This decision is expected to provide greater flexibility for liquidity management and improve the functioning of the money market. The central bank indicated it may conduct repo operations across tenors ranging from 4 to 90 days to support these objectives and enhance monetary policy implementation.

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OMO participation (primary and secondary markets) shall be open to all eligible investors through Deposit Money Banks (DMBs). Eligible investors include individuals, corporates and non-bank financial institutions. DMBs shall continue to submit bids and settle transactions on behalf of their customers.

The apex bank also revised its OMO participation framework. Under the new guidelines, a broader spectrum of investors, including individuals, corporations, and non-bank financial institutions, can now participate in both primary and secondary OMO markets. Deposit Money Banks (DMBs) will continue to facilitate these transactions by submitting bids and settling them on behalf of their customers. The volume, tenor, and frequency of OMO issuances will continue to be determined by prevailing liquidity conditions and monetary policy goals, utilizing the existing single-bid auction format. These new provisions are effective immediately, with the CBN urging strict compliance from all market participants.

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All banks, authorised dealers and market participants are required to ensure strict compliance.