Central Bank of Nigeria Takes Step Towards Better Foreign Exchange Regulation
As part of its efforts to strengthen Nigeria’s foreign exchange market and ensure compliance with global standards, the Central Bank of Nigeria has imposed a mandatory requirement forDeposit Money Banks and all foreign exchange participants to submit reports on compliance with the Financial Markets and Instruments Act(FX) Code.
Deadline for Report Submission: by December 31, 2024
Market participants, defined as banks and financial institutions licensed by the Central Bank of Nigeria (CBN), must report on the institution’s compliance with the FX Code every quarter beginning from December 31, 2024.
According to regulatory guidelines issued by the Apex Bank on October 14, 2024, the participants are expected to conduct self-assessment as well, highlighting areas such as "good-governance," ethics,’ and regulatory risk. Further, FX participants will establish a specific implementation plan regarding the best practices within set deadlines as determined by central bank supervisors. Non-conformance can trigger sanction, under both CBN Act, 2007, or the BOFIN Act.
Moreover the CBN wants its bank to demonstrate an appropriate ‘governance’ culture, set aside their responsibility for an individual FX unit, work well on "emergence " and effectively monitor "and manage threats.
Key Terms and Codes Used
By aligning the financial infrastructure with established best practices throughout the Forex trading and instruments, global Code has facilitated the standardization and quality of transparency for investors trading in Africa, this particular move enhances investor trust & confidence towards foreign transactions’ efficiency across all FX Markets.
These market players ought to consider best practices internationally and engage FX dealings seamlessly. These players would appreciate the robust FX markets being developed due to international influence. Central bank emphasizes.
