The Central Bank of Nigeria (CBN) is undertaking significant changes in the regulation and operation of Nigeria's financial markets. These include a major overhaul of the fixed-income securities trading platform and advancements in open banking initiatives.
CBN to Assume Direct Control of Fixed-Income Securities Trading
Under the new plan, the CBN will assume direct control of the trading platform and settlement processes for Nigeria’s fixed-income securities, including Treasury bills and bonds. The move effectively centralizes key operational functions under the apex bank, replacing the existing infrastructure managed by private platforms such as FMDQ Group.
The CBN’s rationale for the initiative is clear: by directly managing trading and settlement, the apex bank can better monitor market flows, reduce arbitrage opportunities, and strengthen the transmission of its monetary policy decisions. In essence, the CBN is attempting to upgrade Nigeria’s fixed-income “highway,” aiming for a more efficient and transparent system.
Potential Impacts and Challenges
The overhaul could reshape market dynamics. Transitioning trading and settlement to a CBN-controlled platform may affect liquidity, especially during the initial phases. Pension funds, banks, and other institutional participants may have to adjust operational models, potentially creating short-term disruption.
Despite these concerns, the potential benefits are considerable. A unified platform may reduce fragmentation, enhance real-time pricing, and improve transparency in the pricing and settlement of securities.
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Regulatory Friction and Collaboration
However, the move has sparked regulatory friction, particularly with the Securities and Exchange Commission (SEC), which currently holds oversight over Nigeria’s capital markets, including fixed-income instruments. While centralization may improve efficiency, clarity around regulatory roles is critical. Investors and operators need to know who governs what. The success of the overhaul will hinge on collaboration between the CBN, SEC, and market participants.
Advancements in Open Banking
The CBN is also making strides in open banking. The CBN issued operational guidelines for open banking in March 2023, but technical and regulatory groundwork is still being finalised before the full rollout. “There are the guidelines for open banking in Nigeria and the framework for open banking in Nigeria,” Gang explained. Open banking allows licensed financial institutions and third-party providers to share customer-approved data through APIs.
“One of the strongest foundations for open banking is customer consent,” Gang added. Gang explained that when Nigeria’s open banking ecosystem finally launches, there will be clear accountability for data breaches. “Liability lies with whoever loses the data,” he said.
According to him, licensed operators will be held accountable for breaches involving customer data, while unlicensed entities will only access anonymised information. He added that decision-making in the ecosystem must be fair and inclusive. “If you leave it to the banks, it will be very difficult,” he said.
Considerations for Virtual Assets
Gang also confirmed that the CBN is studying how virtual assets, including stablecoins, fit into Nigeria’s financial framework. “The CBN is looking at these innovations [virtual assets],” he said. However, he cautioned that most stablecoins are dollar-denominated and could affect monetary policy if used widely for retail transactions.
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Accountability for Data Breaches in Open Banking
| Entity | Accountability for Data Breaches |
|---|---|
| Licensed Operators | Held accountable for breaches involving customer data. |
| Unlicensed Entities | Access only anonymised information. |
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