CBN reverses OMO restriction, opens market to local investors

In a significant policy shift, the Central Bank of Nigeria (CBN) has ended a seven-year ban that prevented local investors from participating in Open Market Operations (OMO). The restriction, imposed in 2019 to curb pressure on the Naira, encourage real sector lending, and lower interest rates, has now been lifted.

The CBN announced the reversal in a circular dated August 12, 2026, signed by Okey Umeano, Acting Director of the Financial Markets Department. Under the new framework, OMO participation in both primary and secondary markets is now open to all eligible investors, including individuals, corporations, and non-bank financial institutions. These investors will submit bids and settle transactions through their respective Deposit Money Banks (DMBs).

Furthermore, the apex bank has removed restrictions on accessing its Discount Window that were linked to participation in the Nigerian Foreign Exchange Market (NFEM) and primary auctions of government securities. This aims to streamline financial operations and enhance market access.

The CBN also reinstated Tenored Repo Operations, which allow for repo transactions across various tenors ranging from four to 90 days. The bank stated that these operations will bolster effective liquidity management, improve money market functionality, and strengthen monetary policy implementation.

While opening the OMO market to domestic investors is expected to create new investment avenues for short-term securities and deepen the money market, the CBN has retained control over the scale and timing of OMO issuances. The volume, tenor, and frequency of these operations will continue to be determined by the CBN based on prevailing liquidity conditions and monetary policy objectives. The single-bid auction structure for OMO transactions remains in place.