By Muhammad Mamman
Nigeria’s financial world is witnessing a sharp friction between regulators as the Central Bank of Nigeria (CBN) embarks on a sweeping overhaul of the fixed-income market, prompting concern over the blurring of institutional lines and the potential impact on investor confidence.
In early October, the CBN signalled its intention to assume direct control of both the settlement process and trading platform for fixed-income securities starting in November. According to a memo from its Financial Markets Department, the move is part of a larger reform effort designed to enhance transparency, improve market efficiency and strengthen the transmission of monetary policy.
However, the initiative has sparked a wave of criticism, centred on the question of regulatory jurisdiction. Under the newly-passed Investment and Securities Act 2025 (ISA 2025), the oversight of fixed-income securities and market infrastructures lies firmly with the Securities and Exchange Commission (SEC), not the CBN. Market analysts warn that the CBN’s move threatens to undermine the established regulatory framework, create parallel systems and inject uncertainty into the fixed-income market.
At the heart of the dispute is the CBN’s plan to migrate trading for Government securities and other fixed-income instruments onto its settlement platform known as S4. While the CBN justifies the change as “end-to-end settlement and trading oversight” to bolster integrity, critics argue that it effectively replicates the role of a securities exchange without the relevant SEC registration or legal mandate.
For market participants, the implications are significant. The established platform operated by the FMDQ Exchange and managed under SEC supervision may see reduced activity or competitive displacement. Furthermore, the erosion of clear regulatory boundaries could dissuade foreign portfolio investors (FPIs) who demand predictable oversight regimes. Liquidity in the debt markets could suffer as a result.
