August 18, 2026/Coronation Report
Summary
On 12 August 2026, the Central Bank of Nigeria (CBN) issued Circular FMD/DIR/PUB/CIR/001/031, revising the framework governing access to the Standing Lending Facility (SLF)/ Discount Window, tenored repurchase (repo) operations, and participations in Open Market Operation (OMO). The changes, which take immediate effect, mark a further step in the CBN’s ongoing recalibration of money market operations following the FX market reforms and liquidity management adjustments of the past two years.
We view this development as a liberalisation of market access and liquidity management rather than a shift in monetary policy stance. The reforms come against the backdrop of an MPR held at 26.50% since February 2026 and elevated system liquidity. We expect broader participation in OMO auctions, improved market depth and a gradual compression of the OMO–NTB yield gap.
However, the retention of the OMO restriction underscores the CBN’s commitment to effective liquidity sterilisation and the prevention of arbitrage opportunities between its liquidity injection and absorption
facilities.
Key Provisions
The CBN removed Discount Window access restrictions tied to participation in the Nigerian Foreign Exchange Market (NFEM) and in primary government securities auctions, effective immediately. The existing restriction, barring institutions from accessing the Discount Window and participating in Open Market Operations (OMO) auctions on the same day, however, remains in place. Alongside this, the CBN lifted its suspension of Tenored Repo Operations and can now conduct repo transactions across tenors of 4 to 90 days, restoring a tool it had held back for an extended period as part of its liquidity management toolkit. Repos let holders of government securities raise short-term cash without selling the underlying instrument.
This allows Primary Dealers to finance inventory rather than offloading positions to fund fresh auction bids — supporting stronger, more consistent bidding — while also improving secondary market liquidity, since dealers can hold larger books without needing to sell to meet funding needs. The 4–90-day tenor range adds flexibility, letting dealers match financing terms to their expected holding period rather than relying solely on overnight funding.
OMO participation, in both primary and secondary markets, has been opened to individuals, corporates and non-bank financial institutions via Deposit Money Banks (DMBs), which will continue to submit bids and settle on clients’ behalf. Issuance volume, tenor and frequency remain at the CBN’s discretion, guided by prevailing liquidity conditions and monetary policy objectives, and auctions will continue to be conducted on a single-bid basis.
One open question the reform raises but does not resolve is whether Pension Fund Administrators (PFAs) fall within the newly eligible “non-bank financial institutions” category. PFAs hold a substantial pool of money-market instruments, about N2.93trn in money market instruments.
The Previous Framework Governing SLF, Tenored Repo and OMO Access
Under the 7 October 2022 circular, participants with successful foreign exchange bids and transactions were not allowed to access the Discount Window on both auction and transaction settlement dates. The CBN had also suspended tenored repo operations and had segmented the market by excluding domestic corporates and individuals from OMO bills, restricting eligibility to banks and Foreign Portfolio Investors (FPIs) only.
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