Financial instruments and services

Financial Instruments

Liberia Merchant Capital (LMC) trades the following financial instruments as prescribed by the CBL:

  • Government Treasury bills and other short term government securities
  • Central Bank bills and other open market (OMO) instruments
  • Government bonds (subject to maturity profile)
  • Negotiable instruments of deposit (NID) or negotiable certificate of deposit (NCD) issued by Liberian banks and other financial institutions
  • Bankers acceptances (BAs)
  • Highly liquid corporate paper and corporate debt instruments

Activities or services

LMC is licensed to offer the following financial services:

  • facilitate the issue and sale of short-term government securities, Central Bank of Liberia securities and other eligible short-term financial instruments (including commercial bills issued by private and state-owned Liberian corporations);
  • enter into repurchase agreements (repos) and reverse repurchase agreements (reverse repos) of eligible securities approved by the Central Bank of Liberia from time to time;
  • accept call money from licensed banks and other financial institutions;
  • participate in interbank borrowings and placements;To facilitate the issue and sale of short-term government securities, Central Bank of Liberia securities and other eligible short-term financial instruments (including commercial bills issued by private and state-owned Liberian corporations);
  • trade eligible financial instruments in the secondary market;
  • provide discount or re-discount facilities for Treasury securities and other eligible financial instruments;
  • provide fund or portfolio management and financial advisory services;
  • Accept short term investments in the form prescribed by the Central Bank of Liberia; and

This is essentially where a financial instrument such as a Government Treasury Bill is sold against cash with a simultaneous commitment or agreement to buy them back at a specified date and price fixed at transaction date.

The opposite of a repo is called a reverse repo where financial securities are bought against cash with a simultaneous undertaking to sell them back at a future date at a price fixed in advance. Through this transaction, LMC provides liquidity to a holder of a financial instrument.

This is where LMC buys or sells securities outright with prior agreement of a buyback. The transaction is final. This is where LMC creates liquidity into the hands of a financial instrument owner who wants to encash their investment before maturity. It is one of the most important features of a liquid secondary market.

This is a transaction where an investor buys a financial instrument from LMC where the tenure is left open.

These are funds placed by banks with LMC as part of their reserve requirements.