The Central Bank of Nigeria (CBN) has announced that it will take full, direct control of both the trading platform and the settlement process for all fixed-income transactions and Foreign Exchange (FX) products starting in November 2025.
This was detailed in a formal communication signed by Okey Umeano, Acting Director of the Financial Markets Department. The initiative aims to boost transparency and efficiency across Nigeria’s financial ecosystem significantly.l
What does this move mean?
This means that trading of fixed-income and Foreign Exchange (FX) products will be moved from FMDQ Group, a securities exchange and self-regulatory organisation (SRO), to the CBN’s own internal trading platform.
What does it mean for FMDQ?
The CBN was once fully in charge of the trading of fixed-income transactions before FMDQ took it over. FMDQ were created initially to be a regulatory support for CBN and SEC, to complement the CBN and SEC in implementing reforms aimed at strengthening market infrastructure.
As we know, fixed-income instruments are secondarily traded on FMDQ, and with high high-interest environment, this investment tool has gained a lot of traction. This has led to higher volumes of transactions.
In 2024, FMDQ saw 86 percent growth in secondary market activity for products traded, rising from N248.66 trillion in 2023 to N461.34 trillion.
The primary growth drivers were Foreign Exchange (FX), which made up 45 percent of total turnover (with Spot FX growing by a massive 283 percent year-on-year), and the Bills Segment (Nigerian Treasury Bills, OMO Bills, and Special Bills), which contributed the remaining 22 percent of total turnover.
These two segments, FX (45 percent) and Bills (22 percent), together represent 67 percent of the FMDQ’s total trading volume. This means that the 67 percent share is the potential volume that could be impacted or drop from FMDQ trading once the Central Bank of Nigeria’s (CBN) first phase of market control (Go-Live) is fully implemented.
Does this move affect other regulators?
The move doesn’t bypass the SEC or overtake it, because the system used by CBN is SEC-regulated.
What of the impact on the players in the market?
Many analysts who spoke to BusinessDay said that FMDQ developed the fixed-income market and made it user-friendly and modern.
“I have worked with CBN staff while trying to get back retail investors’ principal deposits, and I can say that their processes are backward, slow, undigitalized, and not user-friendly,” an anonymous source told BusinessDay
The worst is that the retail investors will be denied direct access to the Nigerian fixed-income market.
Another market player said that when CBN used to handle settlement, failed trades to settlement were in the range of 60 percent, and FMDQ’s efforts brought it down to 2%!!
Read also: CBN takes direct control of Nigeria’s fixed-income market to boost transparency
Is trade settlement within the jurisdiction of the central banks?
Many central banks globally already operate sovereign bond settlement systems. The Federal Reserve runs Fedwire Securities in the US. The ECB oversees T2S in Europe. The Bank of England has CREST. From this angle, the CBN is simply joining the club.
“There is also the question of settlement risk. By pulling everything into the central bank’s own RTGS system, trades settle in central bank money. That reduces counterparty risk and strengthens systemic safety,”
Government bonds are the lifeblood of monetary policy. They shape interest rates, liquidity, and confidence.
“ If you are the CBN, you want complete visibility of who is buying, who is selling, and where the money is flowing. Relying on third parties can feel like flying blind.”
However, a regulator that also becomes the operator is both referee and striker. It is like FIFA running a football team in the same World Cup it is officiating. The optics are terrible. Investors prize independence and clarity. Once the central bank starts looking like an exchange and a settlement house, confidence takes a hit.
The timing is also dicey. Moving an entire market’s plumbing in a matter of weeks is operationally risky. One system bug, one failed reconciliation, and the market could freeze. Liquidity could vanish. Yields could spike. Confidence could unravel faster than you can say “bond auction.”
How was FMDQ established?
The FMDQ concept was promoted by the Financial Markets Dealers Association (FMDA) in 2009 and sponsored in 2010 by the Bankers’ Committee, chaired by the CBN, with the Nigeria Deposit Insurance Corporation (NDIC) and all the banks and discount houses operating in Nigeria as its members. The committee resolved to set up a self-regulated organisation licensed by the Securities and Exchange Commission (SEC) to operate all the over-the-counter inter-bank market activities in fixed income and currencies.
FMDQ was incorporated on January 6, 2011,, with a N100m contribution by the CBN an and an equal contribution of NGN15m by each of the 25 banks and 5 discount houses to the company’s initial capital. On 6 Nov 2012,the SEC registered FMDQ as an OTC securities exchange and self-regulatory organisation. It started operations a year later, on 7 November 2013.
