Regulatory Alerts2022-10-07 | FMD/DIR/PUB/CIR/001/006Circular to All Authorized Dealers: Access to the Discount Window
The Central Bank of Nigeria (CBN) circulates a reminder to authorized dealers about the rules and regulations surrounding the CBN discount window, which includes various lending and repurchase facilities. Authorized dealers are instructed to refrain from accessing the discount window on specific dates, such as auction and settlement dates, depending on the type of transaction. Non-compliance will result in penalties, including bid reversals and cancellations.
Website: www.cbn.gov.ng CENTRAL BANK OF NIGERIA Corporate Head Office, Central Business District, P.M.B. 0187, Garki, Abuja - F.C.T.
Email: financialmarkets(@cbn.gov.ng Tel: 09 462 36700 Ref: FMD/DIR/PUB/CIR/001/006 07 October 2022 CIRCULAR TO ALL AUTHORIZED DEALERS ACCESS TO THE DISCOUNT WINDOW Our circulars dated August 1, 2012 and August 8, 2016 referenced FMD/DIR/GEN/GIR/03/006 and FMD/DIR/GEN/CIR/07/005, respectively, refer.
The Central Bank of Nigeria (CBN) has observed the non-adherence to the provisions of the aforementioned circulars. The CBN discount window includes the Standing Lending Facility (SLF), the Automated Repo Conversion (AREPO), the Funding for Liquidity Facility (FfLF), and the Tenored Repurchase Transactions (REPO).
Thus, all authorized dealers are invited to note the following: 1.
Open Market Operations: Participants with successful bids at the Open Market Operations (OMO) auctions are to refrain from accessing the discount window on the auction date. Failure to comply shall result in the reversal of allotment.
Government Securities: Participants with successful bids at the government securities auctions (e.g., Nigerian Treasury Bills (NTBs), Federal Government of Nigeria (FGN) Bonds and Sukuk), are not permitted to access the CBN discount window on the settlement date. Requests for SLF, FfLF and REPO on the settlement date will not be permitted. AREPO and conversion of Intraday Liquidity Facility (IDF) to FfLF on the settlement date, as well as running REPO shall attract a penal charge of five per cent (5.00%) flat on the allotment value.
Foreign Exchange: Participants with successful foreign exchange bids and transactions are not to access the discount window on both auction and transaction settlement dates. Failure to comply shall result in the cancellation of the bids or transactions.
This Circular takes immediate effect. All authorized dealers are hereby required to comply accordingly. Thank you.
Angela Sere-Ejembi, PhD Director, Financial Markets Department