The Central Bank of Nigeria’s (CBN) Circular of July 2016 (CBN Circular) approved the quotation rules of the FMDQ OTC Securities Exchange (FMDQ) and authorized the quotation of Commercial Papers in Nigeria. It also directed that deposit money banks and discount houses only deal in Commercial Papers that are registered, quoted, or intended for quotation on authorized securities exchanges, such as FMDQ and NASD, etc, when acting in any capacity in the Commercial Papers transaction.
From the CBN Circular, the apex regulator did not restrict the participation in Commercial Papers to banks and discount houses as other participants such as the Licensed Pension Fund Administrators (LPFAs) can invest in Commercial Papers. However, the lack of regulatory clarity on the participation of LPFAs with the potential for exposure of their interest necessitated the sector’s regulator, the National Pension Commission (PENCOM) to intervene in their investment appetite.
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