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15 Key Points To Note As CBN Electronic Matching System for FX Transactions Kicks Off
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15 Key Points To Note As CBN Electronic Matching System for FX Transactions Kicks Off

by  Dave Ibemere 3 min read
  • The CBN's Electronic Foreign Exchange Matching System (EFEMS) has been launched to stabilise the forex market
  • Under the new system, the apex bank will publish real-time prices and buy/sell order transaction data
  • The EFEMS will also offer guidance to market participants in the forex market, with specific rules to be followed

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Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.

The Central Bank of Nigeria's (CBN) new Electronic Foreign Exchange Matching System (EFEMS) is now live.

The EFEMS will streamline foreign exchange transactions in the Nigerian foreign exchange market.

CBN introduces new forex guidelines
CBN hopes to end speculation in the forex market with new guidelines Photo credit: Bloomberg/contributor
Source: Getty Images

In an earlier statement, Omolara Duke, the Director of the Financial Markets Department at the CBN, said he EFEM will ensure all foreign exchange transactions by authorised dealers are conducted exclusively through the CBN-approved platform, BusinessDay reports.

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A note from CBN reads:

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authorisedegulate the operations of interbank FX trading via the Electronic Foreign Exchange Matching System (EFEMS). The purpose is to ensure transparent, fair, and efficient FX trading, minimizing counterparty risk and ensuring compliance with Central Bank of Nigeria (CBN) regulations.
"The CBN has approved the Bloomberg BMatch as the designated platform to support the EFEMS for interbank trading. All market participants are required to comply strictly with these guidelines and any amendments as may be issued by the CBN from time to time."

Here are the key points to note for EFEM

  • All authorised dealer banks licensed by the CBN are participants in EFEMS.
  • Other participants must obtain prior approval from the CBN to access the EFEMS platform and execute agreements with the platform provider, which the CBN must also approve.
  • The platform provider will assign unique dealing codes to participants who will be responsible for maintaining accurate and updated profiles.
  • Trading hours on EFEMS are from 09:00 to 16:00 hrs WAT on business days.
  • Unmatched orders will be cleared at the market's close and can be resubmitted on the following business day.
  • Quotes on EFEMS will remain anonymous until matched. Once matched, counterparty details will be revealed for settlement purposes.
  • All trades consummated on EFEMS are binding unless cancelled by mutual agreement of both parties with written approval from the CBN.
  • The minimum tradable amount is US$100,000.00, with incremental clip sizes of US$50,000.00.
  • Participants must set credit and settlement limits for other counterparties. Transactions exceeding these limits will not be executed.
  • Participants must have adequate credit and settlement limits set for the CBN as its counterparty bank.
  • Participants are required to comply with the Nigerian Foreign Exchange Code and other CBN regulations.
  • EFEMS shall be used exclusively for executing spot FX transactions involving the Nigerian Naira (NGN) against the United States Dollar (USD). Other currency pairs may be introduced upon CBN's directive.
  • Transactions on EFEMS must be settled through approved settlement systems, with participants bearing responsibility for their obligations.
  • The platform provider must offer real-time support to address system issues. In the event of prolonged downtime, alternative trading protocols will be activated as prescribed by the CBN.
  • Any participant defaulting on settlement obligations will face penalties as determined by the CBN.

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Top US firm predicts naira to dollar exchange rate

Earlier, Legit.ng reported that US-based research firm BMI predicted a new exchange rate for the naira against the dollar in the years ahead.

BMI said it expected the naira to further depreciate in the foreign exchange market to nearly N2,000 a dollar

The Nigerian currency currently exchanges in the official and black markets above N1,681 against the US dollar.

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Source: Legit.ng

Authors:
Dave Ibemere avatar

Dave Ibemere (Senior Business Editor) Dave Ibemere is a senior business editor at Legit.ng. He is a financial journalist with over a decade of experience in print and online media. He also holds a Master's degree from the University of Lagos. He is a member of the African Academy for Open-Source Investigation (AAOSI), the Nigerian Institute of Public Relations and other media think tank groups. He previously worked with The Guardian, BusinessDay, and headed the business desk at Ripples Nigeria. Email: dave.ibemere@corp.legit.ng.

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