The Central Bank of Nigeria has mandated deposit banks and all other participants in the foreign exchange market to submit compliance reports on foreign exchange laws by December 31, 2024.
The directive comes as part of the CBN’s efforts to strengthen the integrity and efficiency of Nigeria’s foreign exchange market and ensure its alignment with global standards.
The FX Code, published by the CBN and effective from October 14, 2024, is a comprehensive set of principles regulating the conduct of market participants to ensure ethical and professional conduct in the Nigerian FX market. is outlined.
The exchange code document says: “The exchange code is issued in accordance with the CBN Act, 2007 and the BOFIA Act, 2020, which empower the Central Bank of Nigeria to issue instructions on the standards to be followed by institutions when conducting foreign exchange operations in Nigeria.”
“Market participants are required to conduct a self-assessment and submit a report to the CBN on the level of compliance of financial institutions with exchange codes by December 31, 2024.
“All market participants will then be required to submit to the CBN a detailed compliance implementation plan approved by their board of directors by December 31, 2024. must be fully compliant by December 31, 2024. ”
The apex bank has clarified who the market participants are, stating that “exchange codes apply to market participants. It is a bank licensed by the Central Bank of Nigeria and engages in wholesale foreign exchange operations in Nigeria as part of its licensed operations.”
The apex bank added that failure to comply with this requirement could result in sanctions, including fines, under the CBN Act of 2007 and the Banks and Other Financial Institutions Act of 2020.
The FX Code introduces new governance structures and operating frameworks for institutions involved in FX activities, such as banks and financial institutions.
These participants must have a sound governance framework, uphold ethical standards, and manage risk effectively.
“Market participants should aspire to the highest professional standards,” the CBN stressed.
quarterly report
From December 31, 2024, market participants will also be required to submit quarterly reports on exchange code compliance to the Financial Markets Authority of the CBN to ensure ongoing compliance.
This quarterly report serves as a continuous monitoring mechanism to ensure transparency and efficiency in the foreign exchange market.
Furthermore, “market participants are required to submit quarterly reports on their level of compliance with the exchange code to the Financial Markets Authority within 14 days after the end of each calendar quarter, with the first report due by December 2024. Until the 31st,” he added. ”
The CBN has also introduced enforcement mechanisms, including sanctions, to deal with cases of violations.
The bank said: “The CBN will take appropriate enforcement and other administrative measures, including fines, as provided in the CBN Act of 2007 and the BOFIA Act of 2020 against market participants who fail to comply with foreign exchange laws. There is a possibility that we will take action.”
The move is part of the CBN’s broader strategy to promote a robust, fair and liquid foreign exchange market that reflects market intelligence and supports Nigeria’s flexible exchange rate regime.
The FX Code is modeled after the globally accepted FX Global Code and aims to consolidate best practices in the Nigerian foreign exchange market.
By complying with international standards, the CBN hopes to create a more transparent and resilient market infrastructure where participants can participate in foreign exchange transactions with confidence at competitive prices.
Punch/Hauwa Abu
