CBN: New electronic matching system for Forex transactions to curb distortions, enhance transparency

*The Central Bank of Nigeria says the introduction of the Electronic Foreign Exchange Matching System for Foreign Exchange transactions is expected to enhance governance, transparency, and facilitate a market-driven exchange rate accessible to consumers

Isola Moses | ConsumerConnect

In a bid to enhance governance, transparency, and facilitate a market-driven Foreign Exchange (Forex) rate, the Central Bank of Nigeria (CBN) has announced the introduction of the Electronic Foreign Exchange Matching System (EFEMS), for Foreign Exchange (FX) transactions in the Nigerian Foreign Exchange Market (NFEM).

The CBN, however, noted the new EFEMS system would be implemented by December 1, 2024.

Omolara Duke, Director of the Financial Markets Department at the Bank, who noted this development in a statement, said there would be a test-week test run November this year.

The Bankers’ Bank, in the statement, said authorised dealers would subsequently conduct all Foreign Exchange transactions in the interbank FX market on the Electronic Foreign Exchange Matching System, as approved by the CBN where transactions would be reflected immediately.

The CBN also explained that the new system is expected to enhance governance, transparency and facilitate a market-driven exchange rate that will be accessible to the public.

Duke further stated: “This development is expected to reduce speculative activities, eliminate market distortions and give the CBN improved oversight capabilities to effectively regulate the market.

“The CBN will publish real time prices and buy/sell orders data from the system, and in collaboration with the Financial Markets Dealers Association (FMDA), publish the rules for the EFEMS.”

The Nigerian FX Code and revised Market Operating Guidelines for the Nigeria Foreign Exchange Market will also provide guidance to market participants, the CBN noted.