By Chioma Obinagwam
The Central Bank of Nigeria (CBN), the country’s apex bank has authorized Deposit Money Banks(DMBs) participating or wishing to participate in the Over The Counter (OTC) trade settlements to pledge a collateral of N1 billion in government bonds or CBN securities for its OTC trade settlement.
This is contained in a release signed by the Director Financial Markets Department of CBN, Dr. Alvan Ikoku published on its website.
“The CBN in an effort to enhance efficiency in trading and post-trade activities and build confidence in the financial markets, hereby directs all Deposit Money Banks(DMBs) to pledge collateral of 1 billion(one billion naira) in Government bonds/ CBN Securities for OTC trade settlements,” the statement disclosed.
Effective from June 1, 2018, the apex bank added that inability to make the pledge or top-up would lead to exclusion from the market.
“The pledge requirement is mandatory for all DMBs that wish to participate in the OTC trade settlement. Lack of provision of the pledge or failure to top-up the pledge will result in exclusion from the market. This circular takes effect from June 1, 2018,” the CBN directed.