When Central Bank of Nigeria announced it will take over the fixed income market in Nigeria from November 2025, investors braced for a seismic shift.
The rollout will happen in two stages: settlement of all government bonds and other debt securities moves to the CBN on , followed by the migration of the trading platform on . The change ends a decade‑long arrangement where the secondary market platform has been run by FMDQ Group, with the CBN sitting on a 15 % share and chairing its board.
Today, the secondary market for Nigerian sovereign and corporate bonds lives on the FMDQ Exchange, a platform that handles everything from order matching to post‑trade settlement. While the system has matured, market participants have long complained about fragmented data flows and a lack of real‑time visibility into who is buying or selling.
That opacity matters because government bonds are the backbone of the Central Bank’s monetary‑policy toolkit. When the CBN can see every transaction, it can fine‑tune liquidity more precisely – a benefit that, in theory, should translate into smoother interest‑rate management.
These dates were disclosed in a formal CBN Fixed Income Market TakeoverAbuja press release, which stressed a “rigorous testing” phase and “continuous stakeholder collaboration.”
“The current setup has significant inefficiencies,” says Odinaka Linos Wuno, a senior fixed‑income trader at SSA. He added that a single‑source settlement could curb the “operational drag” that often inflates transaction costs.
On the other side of the fence, columnist Rasak Adeboye writing for The Nation, warned that “a regulator that also becomes an operator can be likened to being both referee and player in a football match.” He argued that the same outcome – full visibility – could be achieved through a simple interoperable link between FMDQ’s platform and the CBN’s clearing system, without sacrificing market independence.
Critics also flagged the compressed timeline. A system glitch during the parallel run could freeze trading, spike yields and, in worst‑case scenarios, spark a confidence crisis.
CSL Stockbrokers projects that, with inflation easing to about 17 % in October 2025 (down from 20.12 % in August) and a potential 100‑basis‑point rate cut at the November Monetary Policy Committee meeting, domestic bond yields will keep sliding.
“Nominal yields are likely to trend lower in the near term, limiting the appeal of short‑dated securities,” the firm noted. It now recommends investors look beyond the 2024‑2025 maturities and load up on mid‑to‑long‑term sovereign issues, especially the 2033 and 2035 bonds, which offer the best price‑return potential as the curve compresses.
For foreign investors, the CBN’s move could reduce “settlement risk,” but the fear of a regulator‑operator conflict may raise a risk premium, at least until the new system proves reliable.
The biggest head‑scratchers revolve around technology and governance. Migrating an entire market in a matter of weeks is unprecedented in the region. Any mismatch in trade reconciliation could temporarily halt the market, prompting a rush to cash and a sudden spike in yields.
Moreover, the CBN will soon lift the forbearance measures that have been soothing banks’ non‑performing‑loan ratios. The scheduled June 2025 end‑date may flood banks with higher loan loss provisions, tightening credit conditions just as the fixed‑income overhaul rolls out.
Regulators in other jurisdictions, such as the Bank of England, have kept a clear wall between policy‑making and market‑operator roles. Nigeria’s experiment will be watched closely to see if the benefits of unified oversight outweigh the potential erosion of market confidence.
Stakeholders can expect a series of post‑implementation reviews slated for early 2026. The CBN has pledged to publish an audit report by mid‑December 2025, and the Financial Stability Committee will hold a parliamentary hearing in January 2026 to assess systemic impacts.
Until then, bond managers are advised to monitor daily settlement reports, keep an eye on yield spreads, and stagger exposure across different maturities to buffer any unexpected market turbulence.
In the short term, liquidity may wobble as market participants adjust to the new settlement and trading workflows. Over the longer horizon, the CBN’s direct oversight is expected to boost confidence, leading to steadier secondary‑market turnover and tighter bid‑ask spreads.
Systemic glitches, delayed trade confirmations, and a temporary freeze of the order book are the chief operational risks. A failure to reconcile positions could cause a sudden yield spike, especially on short‑dated securities.
Yes. With real‑time data on every bond transaction, the CBN can fine‑tune liquidity injections or withdrawals more precisely, potentially making policy adjustments more effective and lowering the lag between rate decisions and market reaction.
The firm advises focusing on mid‑to‑long‑term sovereign issues, especially the 2033 and 2035 bonds, which stand to benefit most from expected yield compression as inflation eases and policy rates potentially fall.
Countries like Kenya and South Africa have kept a clearer separation between regulators and market operators. Nigeria’s approach is more aggressive, aiming for a single‑pane view of the market, which could set a new benchmark if it proves successful.
