Open Buy Back

Open Buy Back

Open Buy Back, OBB, is a discountable securities traded in the Nigerian Inter-Bank financial market. An Open Buy Back is a money market instrument used to raise short term capital. It is a form of borrowing using Nigerian Government Securities as collateral. It is an open ended transaction with both parties maintaining the right of liquidation or a roll-over without prior notice within trading hours of the day.

An OBB transaction is usually sealed between dealers of different banks and settlement is made at Central Bank where bills are transferred from the borrower’s bills holding to the lenders bills portfolio. On the other hand, funds equivalent to the face value of the treasury bills is moved from the account of the lender to the borrower’s current account with the Central Bank of Nigeria.

This product offers flexibility, but with interest rate and bank stability risk. It is a product for short-term liquidity. OBB offers the benefits of Treasury Bills (counts as liquid asset) while removing the rediscounting risk associated with carrying Treasury Bills.

A casual look at OBB might liken it to a Repo. Though OBB and Repo/Reverse Repo involve the exchange of cash for security with an agreement to buy back, a Repo has a predetermined repurchase date while an OBB is an open ended transaction and securities traded might never be repurchased before maturity.

Also, a Repo can be transacted with different kinds of securities but OBB is strictly limited to Nigerian Government issued securities.

It is quite interesting to note that Open Buy Back is only used in the Nigerian financial markets. As a result, companies selling financial software, such as IFlex and Infosys, have made considerable modifications to their applications to accommodate this unique security.


During the week of March 6, 2006, interest rates for Nigerian open buy backs crashed from 8.25% to 3.85% [1].

External links

Wikimedia Foundation. 2010.

Игры ⚽ Нужен реферат?

Look at other dictionaries:

  • Buy Back —    The purchase by a company of its own shares in the open market, usually based on the belief that the shares are undervalued and that buying them will provide a better investment return than putting cash into the underlying business of the… …   Financial and business terms

  • Open market operations — (also known as OMO) is the buying and selling of government bonds on the open market by a central bank. It is the primary means of implementing monetary policy by a central bank. The usual aim of open market operations is to control the short… …   Wikipedia

  • Open-End Fund — A type of mutual fund that does not have restrictions on the amount of shares the fund will issue. If demand is high enough, the fund will continue to issue shares no matter how many investors there are. Open end funds also buy back shares when… …   Investment dictionary

  • open-end investment company — A mutual fund which will buy back its shares at net asset value and which is continuously offering to sell new shares to the public. See mutual fund …   Black's law dictionary

  • Buy More — (Burbank) Industry Retail Founder(s) Moses Finkelstein Headquarters Burbank, CA …   Wikipedia

  • Open Range — Directed by Kevin Costner Produced by Kevin Costner Jake Eberts …   Wikipedia

  • Open Mike with Mike Bullard — Genre Comedy Written by Mike Bullard Sean Tweedley Presented by Mike Bullard Country of origin Canada …   Wikipedia

  • Open-end fund — An open end(ed) fund is a collective investment scheme which can issue and redeem shares at any time. An investor will generally purchase shares in the fund directly from the fund itself rather than from the existing shareholders. It contrasts… …   Wikipedia

  • open — o|pen1 W1S1 [ˈəupən US ˈou ] adj ▬▬▬▬▬▬▬ 1¦(door/container etc)¦ 2¦(eyes/mouth)¦ 3¦(not enclosed)¦ 4¦(not covered)¦ 5 the open air 6¦(business/building etc)¦ 7¦(not restricted)¦ 8¦(opportunity)¦ 9¦(not secret)¦ 10¦ …   Dictionary of contemporary English

  • Open innovation — Although the idea and discussion about some consequences (especially the interfirm cooperation in R D) date back at least to the 60s, open innovation is a term promoted by Henry Chesbrough, a professor and executive director at the Center for… …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”