The Central Bank of Nigeria’s decision to reopen Open Market Operations securities to retail and corporate investors could intensify competition for funds between the fixed-income market and Nigerian equities.

The policy, announced in a circular dated 12 August 2026, allows individuals, companies and non-bank financial institutions to participate in the primary and secondary OMO markets through deposit money banks.

The move reverses a restriction introduced in 2019 and gives domestic investors direct access to one of the CBN’s key liquidity-management instruments.

While the policy broadens investment opportunities, its potential impact on the Nigerian Exchange is attracting attention, particularly because OMO securities are currently offering yields significantly above comparable treasury bills.

At the treasury bills auction conducted on 12 August, investors submitted about N4.4tn in bids for N700bn on offer. The 91-day bill cleared at 16.30 per cent, the 182-day instrument at 16.50 per cent, while the 364-day bill closed at 17.59 per cent.

The following day, demand for OMO securities was even stronger, with investors submitting N4.93tn for N600bn initially offered by the CBN.

The 103-day OMO bill cleared at 20.39 per cent, while the 138-day instrument recorded a yield of 20.01 per cent. The CBN eventually allotted about N2.60tn.

The yield differential means investors can currently earn roughly three to four percentage points more from comparable OMO instruments than from treasury bills.

“For investors, the implication is that some funds previously allocated to deposits, treasury bills and other money-market instruments could be redirected towards OMO securities,” said an emerging markets analyst, Ike Ibeabuchi.

“This has the capacity to create a higher return threshold for equities, particularly stocks with weak earnings growth, low dividend yields or valuations that do not adequately compensate investors for the additional risks associated with equities,” he added.

Some analysts say the immediate impact should be stronger demand for OMO, but not necessarily lower OMO yields.

The eventual effect on the equities market could therefore depend on how far OMO yields fall as participation expands.

Experts say companies with weak earnings, limited dividend prospects or stretched valuations could come under greater pressure as investors gain access to a relatively lower-risk instrument offering higher returns.

The reopening of OMO could therefore deepen differentiation across the NGX rather than trigger a wholesale selloff.

An Abuja-based economist, Nonso Iheoma, noted that investors may increasingly “demand a clear risk premium before committing funds to equities, making corporate earnings, dividend performance and valuation more important in determining where capital flows.”