Central Bank abolishes 2019 restriction, invites local investors to participate in Open Market Operations
In a landmark policy shift, the Central Bank of Nigeria (CBN) has reversed its seven-year restriction on local investor participation in Open Market Operations (OMO), effective August 12, 2026. The move opens the lucrative short-term securities market to individuals, corporates, and non-bank financial institutions for the first time since 2019.
The policy reversal, contained in a circular signed by Okey Umeano, Ag. Director of Financial Markets Department, marks a significant departure from the CBN’s previous stance. The 2019 restriction was originally implemented to reduce pressure on the Naira, encourage lending to the real sector, and drive down interest rates.
Key Highlights of the New Framework
Under the revised guidelines:
· Broadened Participation: “OMO participation (primary and secondary markets) shall be open to all eligible investors through Deposit Money Banks (DMBs),” the CBN stated, explicitly listing individuals, corporates, and non-bank financial institutions as eligible participants.
· Discount Window Access Restored: The apex bank has removed restrictions on Discount Window access that were previously tied to participation in the Nigerian Foreign Exchange Market (NFEM) and primary government securities auctions.
· Tenored Repo Operations Resumed: The suspension on Tenored Repo Operations has been lifted, allowing the CBN to conduct repo transactions across approved tenors of 4 to 90 days.
What This Means for Investors
The reopening provides domestic investors with a new avenue for short-term investment opportunities, potentially deepening money market activity and broadening the investor base for government securities.
“The removal of these restrictions will support effective liquidity management, improve money market functioning, and enhance monetary policy implementation,” the CBN noted in the circular.
CBN Maintains Control
While opening participation, the central bank retained discretion over OMO issuance, stating that “the volume, tenor and frequency of OMO issuances shall continue to be determined by the CBN in line with prevailing liquidity conditions and monetary policy objectives.” The existing single-bid auction structure will also remain in place.
The policy shift comes as the CBN continues to review market practices and developments across foreign exchange, money, and fixed-income markets.
