FX Code: CBN Gives Deadline for Banks, Others to Meet New Forex Directive
- The Central Bank of Nigeria has directed foreign currency market participants to provide compliance reports by January 31, 2025
- The directive is a component of initiatives to improve market transparency, governance, and moral behaviour
- Best practices are outlined in the Nigeria FX Code to ensure a robust, just, and open foreign exchange market
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Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.
Participants in the foreign exchange market have been instructed by the Central Bank of Nigeria to submit compliance reports by January 31, 2025, detailing their adherence to the Nigeria FX Code.
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The directive is a component of initiatives to improve market transparency, governance, and moral behavior.
With its implementation on December 2, 2024, the Nigeria FX Code lays out best practices to guarantee a strong, equitable, and open foreign exchange market.
It is applicable to authorized dealers licensed under the Bank and Other Financial Institutions Act of 2020, the CBN Act of 2007, and other organizations doing wholesale foreign exchange trading in Nigeria.
Market participants are required by the apex bank to self-evaluate and submit comprehensive reports on their degree of FX Code compliance.
The board of directors of the organization must approve these reports, which also contain an implementation strategy for filling in any compliance gaps.
Additionally, to show supervision and accountability, excerpts from board meeting minutes must be supplied.
On Monday, the FX Code paper was made public. By January 31, 2025, market participants would have to evaluate their own compliance with the FX Code and report back to the CBN on their findings.
“All Market Participants will thereafter be required to submit to CBN a detailed compliance implementation plan that is approved and signed by its Board along with the extracts of the Board meeting.”
Market participants will have to submit quarterly compliance reports to the Central Bank's Financial Markets Department after the initial deadline of January 31.
The first batch of these reports is due on March 31, 2025, and they must be delivered within 14 days of the end of each calendar quarter.
The Central Bank has described enforcement procedures, such as monetary fines as stipulated in the CBN Act of 2007 and the BOFIA Act of 2020, to guarantee compliance with the code.
The actions are intended to correct any violations and encourage honesty in the foreign exchange market.
The Global FX Code serves as the model for the Nigeria FX Code, which addresses the unique peculiarities of the Nigerian FX market while incorporating international best practices.
Important topics covered by the code include risk management, information sharing, ethics, governance, execution, and settlement procedures.
The Central Bank anticipates that market players will uphold the highest moral standards, create reliable governance frameworks, conduct transactions equitably, safeguard private data, and put strong risk management plans in place.
CBN set to introduce compliance department
Legit.ng reported that a new compliance department will be established within the apex bank by the end of February, according to announcements made by Olayemi Cardoso, governor of the Central Bank of Nigeria.
Cardoso revealed this on Thursday, January 23rd when he gave the keynote speech at the Nigerian Economic Summit Group's 2025 macroeconomic forecast launch.
The CBN governor added that the introduction of a foreign exchange code would guarantee that the market functions in a fair and open manner by giving clear instructions on what is expected of market participants.
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Source: Legit.ng
