CBN releases Forex Code to guide market operators, curb infractions and ensure transparency

*The Central Bank of Nigeria explains the country’s Foreign Exchange (Forex) Code and revised Market Operating Guidelines for the Nigeria Foreign Exchange Market will further provide guidance to market participants, ensure transparency, and facilitate a market-driven exchange rate in the market

Alexander Davis | ConsumerConnect

In a bid to enhance governance, transparency, and facilitate a market-driven exchange rate, the Central Bank of Nigeria (CBN) has approved the release of the Nigerian Foreign Exchange (Forex) Code as a guideline to the banking industry.

ConsumerConnect reports the CBN, in a notice published on its corporate Web site Thursday, January 23, 2025, said the initiative was designed to promote ethical conduct of Authorised Dealers in the Forex market in the country.

The Nigerian banking regulator also announced that the code would be formally launched January 28, 2025, in Abuja, FCT.

It is recalled that the Bankers’ Bank, October 2024, had announced the introduction of the Electronic Foreign Exchange Matching System (EFEMS), for Foreign Exchange (FX) transactions in the Nigerian Foreign Exchange Market (NFEM).

According to the Bank, the implementation of the new system come into effect not later than December 01 last year, and preceded by a two-week test run November 2024.

It further noted that the system seeks to enhance governance, and transparency and facilitate a market-driven exchange rate that will be accessible to the public.

The platform also will reduce speculative activities, eliminate market distortions and give the CBN improved oversight capabilities to effectively regulate the market, the CBN said.

The Bank also explained that authorised dealers would subsequently conduct all FX transactions in the interbank FX market on the EFEMS approved by the apex bank where transactions will be reflected immediately.

Authorised dealers were, therefore, required to comply with extant guidelines and regulations governing the FX market and ensure that all necessary documentation, training, and systems integrations were concluded ahead of the go-live date.

The Central Bank of Nigeria as well assured that it would 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.