BTA2023 The Central Bank of Nigeria (CBN) has approved the release of the Nigerian Foreign Exchange (FX) Code. This code serves as a crucial guideline for the banking industry, promoting ethical conduct among Authorized Dealers in the Nigerian FX market.
The CBN announced that the formal launch of the code will take place on January 28, 2025, in Abuja. This move follows the introduction of the Electronic Foreign Exchange Matching System (EFEMS) in October 2024, designed to streamline FX transactions in the Nigerian Foreign Exchange Market (NFEM).
Key Objectives of the EFEMS:
- Enhanced Governance and Transparency: The EFEMS aims to improve transparency and accountability within the FX market.
- Market-Driven Exchange Rate: The system will facilitate a more market-driven exchange rate that is readily accessible to the public.
- Reduced Speculation: The platform is expected to curb speculative activities and minimize market distortions.
- Improved Oversight: The CBN will gain enhanced oversight capabilities to effectively regulate the FX market.
Implementation of the EFEMS
The EFEMS was scheduled to be implemented by December 1, 2024, following a two-week test run in November. All FX transactions in the interbank FX market will be conducted exclusively on the EFEMS platform. Authorized dealers are required to adhere to all relevant guidelines and regulations, ensuring necessary documentation, training, and system integrations are completed before the go-live date.
Key Features of the New Framework
- Real-time Data: The CBN will publish real-time prices and buy/sell order data from the EFEMS.
- Collaboration with FMDA: The CBN will collaborate with the Financial Markets Dealers Association (FMDA) to establish the rules for the EFEMS.
- Comprehensive Guidelines: The Nigerian FX Code and revised Market Operating Guidelines will provide comprehensive guidance to all market participants.
The introduction of the FX Code and the implementation of the EFEMS represent significant steps towards a more transparent, efficient, and regulated foreign exchange market in Nigeria.
