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Stockbrokers call for forex discount window


For the capital market to witness improved liquidity that would spur activities in the nation’s bourse and attract more investments, operators unanimously stressed the need for the Central Bank of Nigeria (CBN) to grant stockbrokers access to foreign exchange discount window.

According to the operators, who spoke exclusively with The Guardian, the illiquidity state of the market is evident in the low market capitalisation, and the few listed companies that characterise the stock market presently.

They however argued that access to CBN‘s discount window would enhance securities lending, and ultimately promote price moderation in the market.


A discount window is an instrument of monetary policy (usually controlled by central banks) that allows eligible institutions to borrow money from the Central Bank, usually on a short-term basis, to meet temporary shortage of liquidity caused by internal or external disruptions.

Furthermore, the operators suggested that the apex bank should put control measures in place that would enable stockbrokers become more cautions and avoid misuse of liquidity.

For instance, the Executive Vice Chairman, Capital Assets Limited Ariyo Olushekun, said the CBN discount window, which is already accessible to quite a number of sectors within the financial industry would help avert liquidity crisis in the market and empower operators.

Olushekun, who is also the former President and Chairman, Governing Council, Chartered Institute Stockbrokers (CIS), said: “If brokers have access to that window, a lot of things that have not been happening before will start happening. For instance, the securities lending will be more effectively done, and market making can also become better.

“If these two are effective, you will see price moderation because when a stock is tending toward being over-priced, there are things that are needed to be done by certain operators in the market to bring the prices to the correct level.

“That is not being done now; we need liquidity to do that. If we have access to the discount window, brokers will be empowered, not only brokers. The CBN need not to be afraid, they can actually put certain controls in place to ensure that liquidity is not misused. So it is something that is needed in the market.”

A stockbroker with Delloit Securities Limited, Tunde Oyediran, noted that the market is faced with enormous constraints, especially lack of liquidity to execute transactions.

He argued that the CBN discount window would help revive capital market operations, and stimulate investors’ participation.“It will revitalise the capital market operations. Due to lack of liquidity, foreign investors and some institutional investors are the ones benefiting from the recent market upbeats. They have access to cheap funds with the very low interest rate. Nigerian operators are just seeing it with their eyes because there is no fund to take advantage of the price appreciation.”

The Managing Director, High Cap Securities, Imafidon Adonri, said stockbroking firms need funds to drive their business activities, adding that liquidity can come in access to money market instruments through the CBN discount window.

He also urged that brokers should be allowed to participate in the primary auction market for bonds and Treasury bills that will give them the leverage to assemble the instruments from the market, and subsequently mark them down through the discount window of CBN.

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Ariyo OlushekunCBN
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