…As banks’ deposit with CBN hits record N6.08trn
The Central Bank of Nigeria (CBN) has announced a series of sweeping operational reforms aimed at enhancing transparency, efficiency, and regulatory oversight in the Nigerian Fixed Income Market.
In a letter titled “Operational Changes to the Nigerian Fixed Income Market” addressed to the Financial Markets Dealers Association (FMDA), the apex bank outlined key changes designed to reposition the market as a more effective tool for monetary policy transmission and economic development.
These reforms were introduced at a time when commercial banks’ deposits with the CBN, via the Standing Deposit Facility (SDF), surged to a historic N6.08 trillion, signaling a need for improved liquidity management and market coordination.
New Oversight and Settlement Structure
Under the new framework, the CBN will assume full oversight of the fixed income market’s settlement process and trading platform. This transition marks a significant shift, placing the end-to-end management of settlements directly under the Bank’s established financial market systems.
According to the CBN, the goal is to ensure market integrity, streamline operations, and create a unified regulatory framework that offers full visibility into transactions and strengthens supervisory control. This phase is set to eliminate redundant layers in the settlement process, such as intermediaries who have historically stood between market participants like banks and pension fund administrators (PFAs).
While FMDQ, the current settlement body, will remain active, it will now focus on complementary roles. The CBN emphasised that the move is not about replacing the existing trading platform, but about taking over settlement responsibilities to enhance transparency and efficiency.
Market Experts Weigh In
Ayodele Akinwunmi, Chief Economist at United Capital Plc, described the development as a strategic effort by the CBN to build a transparent and efficient market infrastructure. He noted that access to accurate data on fixed income securities will improve monetary policy implementation, allowing the CBN to make informed decisions on liquidity management, interest rate direction, and inflation control.
According to Akinwunmi, “The CBN wants end-to-end settlement visibility, which enables them to know exactly where the market is heading and adjust policy tools accordingly. FMDQ has done a good job so far, but this move ensures deeper regulatory control.”
Read also: Perspectives on CBN’s plan to take full control of fixed income market
Phased Implementation for Seamless Transition
To minimise disruption, the operational changes will be rolled out in stages, in close collaboration with market stakeholders.
The first major milestone will be the User Acceptance Testing (UAT) scheduled for the second week of October 2025. This will test the full functionality of the proposed settlement process. Following a successful UAT, a pilot phase will commence, running concurrently with the existing system to ensure stability.
Go-Live Timeline
The CBN has set November 3, 2025 as the target date for full migration of all fixed income settlement activities to the new system. This will be followed by the launch of a CBN-sponsored trading engine on December 1, 2025, which will cater to Primary Dealers, Market Makers, PFAs, and other licensed participants.
A Call for Stakeholder Collaboration
The CBN acknowledged the critical role of the FMDA in the development of Nigeria’s financial markets and called for continued collaboration to ensure the success of these reforms. The Bank reaffirmed its commitment to a transparent and well-regulated fixed income market that supports economic growth while safeguarding the interests of all participants.
For additional details or clarification, stakeholders are encouraged to contact Okey Umeano, acting director, Financial Markets.
Understanding the Fixed Income Market
The fixed income market is a segment of the financial system where debt instruments, such as bonds are issued and traded. These instruments typically offer investors fixed or predictable returns over time. Issuers can be governments or corporations, and investors range from individuals to institutional players like pension funds.
Because of its predictable return profile and relatively lower risk compared to equities, fixed income plays a vital role in capital allocation, liquidity management, and macroeconomic stability. The market is supported by a network of issuers, investors, brokers, credit rating agencies, and regulators working together to ensure efficient functioning.
With these reforms, the CBN aims to create a more transparent, efficient, and resilient fixed income market that better supports Nigeria’s monetary policy objectives and economic development goals.ho
