CBN’s Bold Move: Central Bank Set to Take Full Control of Nigeria’s Fixed Income Market — Analysts Warn of Confidence Risks
The Central Bank of Nigeria (CBN) has unveiled plans to assume full operational control of the nation’s fixed income market, a move that has sparked both curiosity and caution among financial experts and market participants.
According to the policy schedule, settlement of fixed income securities will migrate to the CBN by November 3, 2025, while by December 1, 2025, the apex bank itself will take over direct management of the trading platform.
Currently, the secondary fixed income market — which includes government bonds and treasury bills — is operated by FMDQ Group, a private market infrastructure company in which the CBN holds about a 15% stake and has played a significant governance role for over a decade.
The Policy Shift — Why CBN Wants More Control
The CBN’s decision is anchored on its desire to enhance visibility, transparency, and policy effectiveness in the bond market.
Government bonds are the backbone of monetary policy, shaping interest rates, liquidity levels, and investor confidence.
By consolidating control, the CBN seeks to track who is buying, who is selling, and where liquidity is flowing, ensuring tighter policy coordination.
However, market watchers have raised concerns that this objective could have been achieved through better interoperability between the existing FMDQ platform and the CBN systems, rather than a full operational takeover.
⚖️ Regulator and Operator — A Question of Independence
Analysts warn that this shift could blur the line between regulation and market operation, potentially undermining investor confidence.
“When a regulator becomes both the referee and the player, it creates perception risk,” one analyst noted.
“Investors prize independence, predictability, and transparency. If the CBN starts running the trading platform directly, it may appear as though the rules could change by fiat.”
The concern is not only structural but also operational. Migrating the entire fixed income market to a new platform in just a few weeks introduces significant risks — from system bugs and reconciliation errors to potential market freezes and liquidity shocks.
The SEC Angle — Overlapping Regulatory Powers
Another layer of complexity lies in regulatory jurisdiction.
Government bonds are classified as capital market instruments, meaning they fall under the supervision of the Securities and Exchange Commission (SEC).
The CBN’s planned move to operate both the trading and post-trade functions could be interpreted as an encroachment on SEC’s statutory authority — a development that market participants believe could strain inter-agency collaboration.
Many are now watching to see how the SEC will respond in the coming weeks.
Investor Implications — Risk Premium and Market Confidence
Experts warn that if investors perceive the market as being overly controlled or unpredictable, they could demand higher risk premiums, leading to:
• Higher bond yields for the government,
• Increased borrowing costs for corporates, and
• Reduced portfolio inflows from foreign investors.
“Nigeria has spent the last decade building an independent and vibrant market infrastructure,” said a financial analyst.
“This move risks taking us back to the pre-2014 era — when the market was shallow, illiquid, and dominated by central control.”
A Better Path Forward
Rather than a full takeover, many believe the ideal path is collaboration and reform, not centralisation.
By enforcing stricter governance at FMDQ, ensuring interoperability between CBN and market platforms, and improving regulatory transparency, Nigeria can achieve both policy control and market confidence.
At the heart of it all, investors — local and foreign — are simply asking for markets that are:
✅ Transparent
✅ Predictable, and
✅ Respectful of established rules
The Bottom Line
The CBN’s move to take over the fixed income market could redefine Nigeria’s financial landscape — for better or worse.
While its motives may be grounded in transparency and policy oversight, execution, timing, and communication will determine whether this shift strengthens or unsettles market confidence.
The Central Bank of Nigeria (CBN) has unveiled plans to assume full operational control of the nation’s fixed income market, a move that has sparked both curiosity and caution among financial experts and market participants.
According to the policy schedule, settlement of fixed income securities will migrate to the CBN by November 3, 2025, while by December 1, 2025, the apex bank itself will take over direct management of the trading platform.
Currently, the secondary fixed income market — which includes government bonds and treasury bills — is operated by FMDQ Group, a private market infrastructure company in which the CBN holds about a 15% stake and has played a significant governance role for over a decade.
The Policy Shift — Why CBN Wants More Control
The CBN’s decision is anchored on its desire to enhance visibility, transparency, and policy effectiveness in the bond market.
Government bonds are the backbone of monetary policy, shaping interest rates, liquidity levels, and investor confidence.
By consolidating control, the CBN seeks to track who is buying, who is selling, and where liquidity is flowing, ensuring tighter policy coordination.
However, market watchers have raised concerns that this objective could have been achieved through better interoperability between the existing FMDQ platform and the CBN systems, rather than a full operational takeover.
⚖️ Regulator and Operator — A Question of Independence
Analysts warn that this shift could blur the line between regulation and market operation, potentially undermining investor confidence.
“When a regulator becomes both the referee and the player, it creates perception risk,” one analyst noted.
“Investors prize independence, predictability, and transparency. If the CBN starts running the trading platform directly, it may appear as though the rules could change by fiat.”
The concern is not only structural but also operational. Migrating the entire fixed income market to a new platform in just a few weeks introduces significant risks — from system bugs and reconciliation errors to potential market freezes and liquidity shocks.
The SEC Angle — Overlapping Regulatory Powers
Another layer of complexity lies in regulatory jurisdiction.
Government bonds are classified as capital market instruments, meaning they fall under the supervision of the Securities and Exchange Commission (SEC).
The CBN’s planned move to operate both the trading and post-trade functions could be interpreted as an encroachment on SEC’s statutory authority — a development that market participants believe could strain inter-agency collaboration.
Many are now watching to see how the SEC will respond in the coming weeks.
Investor Implications — Risk Premium and Market Confidence
Experts warn that if investors perceive the market as being overly controlled or unpredictable, they could demand higher risk premiums, leading to:
• Higher bond yields for the government,
• Increased borrowing costs for corporates, and
• Reduced portfolio inflows from foreign investors.
“Nigeria has spent the last decade building an independent and vibrant market infrastructure,” said a financial analyst.
“This move risks taking us back to the pre-2014 era — when the market was shallow, illiquid, and dominated by central control.”
A Better Path Forward
Rather than a full takeover, many believe the ideal path is collaboration and reform, not centralisation.
By enforcing stricter governance at FMDQ, ensuring interoperability between CBN and market platforms, and improving regulatory transparency, Nigeria can achieve both policy control and market confidence.
At the heart of it all, investors — local and foreign — are simply asking for markets that are:
✅ Transparent
✅ Predictable, and
✅ Respectful of established rules
The Bottom Line
The CBN’s move to take over the fixed income market could redefine Nigeria’s financial landscape — for better or worse.
While its motives may be grounded in transparency and policy oversight, execution, timing, and communication will determine whether this shift strengthens or unsettles market confidence.