- The Central Bank of Nigeria (CBN) has announced the Electronic Foreign Exchange Matching System (EFEMS) launch for Foreign Exchange (FX) transactions in the Nigerian Foreign Exchange Market (NFEM).
- The platform is set to be implemented by December 1, 2024, following a two-week test run in November 2024.
- With this development, authorised dealers will now conduct all foreign exchange transactions in the interbank FX market through the system approved by the CBN, where transactions reflect immediately.
As stated in a circular signed by Dr. Omolara O. Duke, Director of the Financial Markets Department, CBN, the new system will improve governance, transparency, and support a market-driven exchange rate that will be publicly accessible.
The system is also expected to curb speculative activities, eliminate market distortions, and enhance the CBN’s oversight capabilities for more effective market regulation.
“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 circular partially reads.
Authorised dealers are instructed to comply with existing guidelines and regulations governing the Nigeria foreign exchange market, and ensure that all necessary documentation, training, and systems integrations are concluded ahead of the go live date.
Similarly, the bank has also announced a fresh Foreign Exchange Code as guidelines to eligible players in the country’s FX market. The FX code will regulate Nigeria’s financial system and supervise the foreign exchange market in line with global best practices.
The guideline which will take effect on October 14, 2024, mandates market participants to submit a quarterly report to the Financial Markets Department (FMD), on the level of compliance to the FX Code within 14 days after the end of every calendar quarter, with the first report due by December 31, 2024.
This development forms a part of the central bank’s effort to stabilise the country’s financial system and enhance trust in the foreign exchange market.
In May 2024, the apex bank granted preliminary approval to 14 new International Money Transfer Operators (IMTOs) to boost foreign-currency remittance inflows through official channels amid Naira fluctuation.
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Meanwhile, the Bureau De Change (BDC) operators in Nigeria have accused International Money Transfer Operators (IMTOs) of intercepting external remittances, contributing to dollar shortages in the parallel market.
