To this end, THISDAY gathered that money market dealers had been asked to send their input on the proposed system to the office of the Financial Market Dealers Association (FMDA).
The new system being put forward by CBN, will ultimately replace the T24 settlement transactions.
The RTGS is a system where transfer of money takes place from one bank to another on a real time and on gross basis.
Settlement in real time means payment transaction is not subjected to any waiting period. The transactions are settled as soon as they are processed. The T24, on the other hand, is the funds transfer systems where both money and securities are transferred from one bank to another on a real time and on gross basis.
A source at a meeting of money market dealers/chief dealers of banks and discount houses held in Lagos on Friday, disclosed this to THISDAY.
The CBN Governor, Mallam Sanusi Lamido Sanusi, said last year, that the proposed RTGS for the market would meet international standard.
According to him, the new settlement system to be introduced, would improve current interbank, third party and debit fund transfers.
It will also attend to issues of net settlement scheme cheques, e-payment switching, delivery versus payment securities trade settlements and payment versus payment for forex trade settlement, Sanusi had said.
Other issues that were discussed at the meeting were the plans to introduce two-way quote for Open Buy Back (OBB) market and two-way quote for clean funds.
Issues identified to have been inhibiting the smooth take-off of the OBB market were said to include credit limits, quote size, lines, tenors, amongst others.
It was reiterated that starting with OBB will be much easier because it is collaterised and imperfections that may arise would be taken care off; consequently, other markets such as FX NGN will benefit. Trade it for 6-months and try for clean placements/deposits but the challenge identified was limits.
It was however, observed that quoting for OBB could be tricky as the kind of security to be used remain unresolved. Consequently, it was suggested that a custodian be set up such that participating banks/Discount Houses pledges to the custodian; thus, the custodian settles. But Major issue around OBB concerned the bonds to deliver to settle trades and appropriate haircut, the minutes of the meeting obtained by THISDAY said.
It also revealed thatanother issue that was discussed was the reluctance of banks to show deposits on their books as per their internal management requirements. This was discussed extensively and it was agreed to first come up with a structure for both products and allow the market to decide which way it would go.