|
Getting your Trinity Audio player ready...
|
Over-the-Counter deals worth about N200 billion in Nigeria’s fixed income market became murky yesterday as dealers could not settle transactions in FGN bonds and Treasury Bills (T-Bills), BusinessDay has learnt.
The cause, it was further learnt, came from the Scripless Securities Settlement System (S4) and Real-Time Gross Settlement (RTGS) platforms of the Central Bank of Nigeria (CBN) which failed to work.
Analysts said the disappointing outing yesterday could have cost dealers 65 per cent in volume of transactions, expressing worries as it comes barely six months after the CBN became the depository for both FGN bonds and Treasury Bills.
Many market participants had expressed worries about the implication and challenges CBN would face by assuming such depository role.
OTC-traded Federal Government of Nigeria (FGN) bonds started settling on the Scripless Securities Settlement System (S4) of the CBN on December 20, 2013.
The apex bank had claimed that the platform would trigger rapid transformational developments in the financial markets, allowing real-time settlements of transactions in the capital, commodity and foreign exchange markets.
“The S4 and RTGS platforms of the CBN have not worked today (that is yesterday) despite every effort. There is therefore no way to settle any fixed income (T-Bills and FGN bonds) transactions in the market today (that is yesterday),” a market source told BusinessDay yesterday.
“This never happens to the equities market handled by the Central Securities Clearing System (CSCS). The CBN has bitten more than it can chew, going to set up a depository,” our source added.
Another source wondered if anybody would be able to convince the CBN to hands off the depository role of fixed income transactions in OTC market.
“They should allow CSCS to take that role. Though it wasn’t perfect before, there was no problem in settlement. The going burst of Express Discount exposed operational lapses of CBN. It has destroyed liquidity in the market and chased away a lot of people, particularly foreign investors,” the source said.
“CBN is now the regulator and service provider, who will query them in situations like this? The settlement system they bought is behind our market. The simple way we could have this addressed is to hand the role to CSCS. We had the opportunity to do this but the problem is inside CBN because they did not trust CSCS. CBN didn’t think through so many things before assuming this role,” he added.
Iheanyi Nwachukwu
