The Central Bank of Nigeria (CBN) has provided clarification of the lingering confusion between the two money market instruments, the Open Market Operation (OMO) Bills and the Nigerian Treasury Bills (NTBs).
In a note, obtained by Daily Independent correspondent, the CBN acknowledged the confusion in the public space about the two Money Market Instruments – OMO bills and the NTBs. And therefore obligated by the need to clarify the differences between the two instruments.
The CBN said: “Whereas the Central Bank of Nigeria (CBN) is the issuer of the Open Market Operation (OMO) Bills, the CBN only issues the NTBs on behalf of the Debt Management Office (DMO) on behalf of the Federal Government of Nigeria.
“Also, while OMO Bills are strictly for liquidity management to achieve price stability, NTBs are for financing Federal Government budget requirements
The CBN note further said “OMO Bills are issued on need basis and at irregular intervals depending on banking system liquidity position. Conversely, for NTBs, auctions are done mostly twice a month strictly based on quarterly advanced or released calendar”.
The tenors for CBN OMO Bills are 7 to 365 days, while those of NTBs are for 91, 182 and 364-day. The obligor for the CBN OMO Bills is the CBN, just as the Federal Government of Nigeria is the obligor for NTBs.
In terms of type of auction, OMO allows for single bids, where Money Market Dealers can submit only one bid. However, multiple bids are allowed under NTBs and Money Market Dealers can submit several bids.
OMO Bills and NTBs each have their own unique identities, separate from other securities or instruments in the money market.