CBN directs DMBs to pledge N1bn on government/CBN securities

The Central Bank of Nigeria (CBN) has directed Deposit Money Banks (DMBs) to pledge collateral of N1 billion worth of government/CBN securities for OTC trade settlement.

The Director, financial markets Department, Dr. Alvan Ikoku in a circular, with reference FMD/DIR/CIR/GEN/09/003  to all DMBs said the apex bank aimed to enhance efficiency in trading and pos-trade activities and build confidence in the financial markets.

The circular takes effect from June 1, 2018.

The circular, according to him, states: “The Central Bank of Nigeria (CBN) in an effort to enhance efficiency in trading and post-trade activities and build confidence in the financial markets hereby directs all DMBs to pledge collateral of N1 billion worth of government/CBN securities for OTC trade settlement.

“The pledge requirement is mandatory for all DMBs that wish to participate in OTC trade settlement. Lack of provision of the pledge or failure to top-up a pledge when required will result in exclusion from the market.”

He, however, urged DMBs to ensure compliance.