At first, guided by the instincts of news judgment, I toyed with the idea of titling this piece “The Trial of Olayemi Cardoso.” But I decided otherwise. The real motive behind the Central Bank of Nigeria’s (CBN) plan to take over the issuance and management of fixed income securities is still shrouded in secrecy. But the investing public deserves a more cogent and transparent explanation from the governor of the Central Bank.
What is clear, however, is that the proposal has ignited a storm of debate across the financial market. The apex bank may well be driven by the desire to improve efficiency, enhance coordination, and perhaps rein in the abuse of Treasury Bills by banks that have turned them into easy profit avenues, often to the detriment of securities dealing firms. Yet, beyond these possible intentions, the move raises weighty questions about institutional boundaries, regulatory clarity, and the long-term health of Nigeria’s capital market.
Fixed income securities, typified by government bonds, corporate bonds, and treasury instruments are the backbone of every mature financial system. They provide a benchmark for interest rates, enable governments and corporations to raise capital, and serve as a safe investment option for individuals and institutions. The success of this market depends on transparency, predictable regulation, and the confidence of investors.
Traditionally, the roles in this ecosystem are clearly defined. The Central Bank focuses on monetary policy, controlling inflation, managing liquidity, and ensuring financial stability. The Debt Management Office (DMO) handles the issuance of government debt instruments, while the Securities and Exchange Commission (SEC) regulates the capital market and protects investors. When these lines blur, confusion sets in, and the integrity of the market is threatened.
The CBN’s proposed foray into fixed income securities risks duplicating the functions of both the SEC and DMO. Such overlap can create regulatory arbitrage and uncertainty among market participants. Investors, particularly foreign portfolio investors, place a premium on institutional clarity. A fragmented regulatory environment could therefore undermine confidence and reduce participation.
Globally, leading economies have maintained a separation of responsibilities. In the United States, the Federal Reserve conducts monetary policy and manages short-term liquidity through open market operations, but the U.S. Treasury issues bonds, and the Securities and Exchange Commission oversees the secondary market. In the United Kingdom, the Bank of England works with the Debt Management Office but does not control the bond market. The same applies in South Africa, where the Reserve Bank maintains macroeconomic oversight while the National Treasury handles debt issuance.
I must be quick to add that these models work because they ensure checks and balances. No single institution controls all aspects of debt management, market regulation, and liquidity administration. Advocates of the CBN’s plan argue that bringing fixed income activities under one umbrella could enhance efficiency and liquidity management. However, efficiency in financial markets rarely comes from centralisation, it grows out of collaboration and transparency.
Nigeria already has strong infrastructure in this space: the Nigerian Exchange Limited (NGX) and FMDQ Group, supported institutionally by CBN, provide well-established platforms for listing and trading debt securities. What is required is not a takeover, but closer coordination among the CBN, DMO, SEC, and market operators to strengthen market depth and investor confidence.
A major risk of the proposed approach is the potential conflict of interest. If the CBN becomes both a regulator and an active participant in the fixed income market, it could compromise transparency and pricing integrity. Markets operate best when guided by clear rules and independent oversight, not when one institution assumes overlapping powers. Nigeria’s financial system would benefit more from a coordinated framework that leverages the comparative strengths of each institution. The CBN should continue to focus on its core mandate of monetary stability, while working closely with the DMO on debt management strategy and with the SEC on market regulation.
Furthermore, reforms should prioritise expanding participation in the fixed income market, encouraging corporate bond issuance, improving disclosure standards, and leveraging technology to increase transparency and efficiency. These steps would deepen liquidity and attract sustainable investment without altering institutional roles.
The CBN’s ambition to strengthen Nigeria’s debt market is commendable. However, true market development is built on shared vision, not concentrated power. Nigeria’s financial system has matured through years of institutional collaboration, a delicate balance that thrives on trust and predictability. Disrupting that equilibrium could destabilize an ecosystem painstakingly built over decades. If the CBN now intends to take over the fixed income market in broad daylight, one must ask: what becomes of SEC and the self regulatory organisations (SROs) that safeguard market integrity? The days when the SEC was merely a department under the CBN are long gone.
The CBN’s ambition could easily morph into a full-blown takeover of the fixed income market. And once that line is crossed, the Nigerian Exchange Limited (NGX) may well become the next target. Nigeria’s fixed income market doesn’t need another overlord; it needs integration, transparency, and inclusivity. The apex bank must resist the urge to blur regulatory boundaries or intimidate market operators into speaking in guarded tones for fear of victimisation. True reform flourishes in open dialogue, not in a climate of quiet compliance.
When the market went red recently in the presence of the Finance Minister, Uncle Wale Edun at NGX over the capital gains tax controversy, he wrapped his comments in a dose of damage control, assuring nervous stockbrokers that the government would look into the issue. At the heart of this new drama over fixed income securities lies a simple truth: confidence is the currency of every capital market. Once that confidence is shaken, even the best-intentioned reforms lose credibility. The CBN must remember that leadership of the financial system does not translate to ownership of it. Collaboration, not control, will define the strength and sustainability of Nigeria’s debt market. If the apex bank truly seeks progress, it must build bridges, not boundaries, with other regulators.
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