Central Bank of Nigeria Licenses Bureau de Change Operators in Retail Foreign Exchange Market
The Central Bank of Nigeria (CBN) has formally approved the participation of licensed Bureau de Change (BDC) operators in the Nigerian Foreign Exchange Market (NFEM), a move aimed at enhancing foreign exchange (FX) liquidity at the retail level. The policy shift was detailed in a circular from the CBN’s Director of Trade and Exchange Department.
Under the new framework, all CBN-licensed BDCs may access foreign currency through any Authorised Dealer Bank of their choice, using prevailing market rates. Each BDC’s weekly FX purchase from the NFEM is capped at $150,000, with utilisation mandated to follow existing operational guidelines for BDCs.
The CBN framed the decision as part of broader efforts to deepen market efficiency and expand access to foreign exchange across the economy. However, the central bank imposed stringent compliance and risk-management conditions to accompany this market access.
Authorised Dealer Banks are now required to conduct comprehensive Know-Your-Customer (KYC) and due diligence checks on BDC clients prior to any FX sale. To bolster transparency, all licensed BDCs must submit timely and accurate electronic returns in compliance with existing regulations. A key liquidity rule stipulates that any unutilised foreign exchange must be sold back into the market within 24 hours, as BDCs are prohibited from holding open FX positions sourced from the NFEM.
Transaction settlement was also tightly regulated. All FX deals must be processed through settlement accounts with licensed financial institutions. Third-party transactions are expressly forbidden, and cash settlement is restricted to a maximum of 25 per cent of any transaction’s value.
This directive underscores the CBN’s strategy to balance improved retail FX access with robust regulatory oversight. By integrating BDCs into the formal market while enforcing strict procedural safeguards, the CBN aims to support liquidity without compromising financial system integrity. The policy is expected to reshape the retail foreign exchange segment, potentially increasing competition and formalisation while placing greater accountability on both BDCs and their banking partners.
