The Central Bank of Nigeria (CBN) has announced a minimum trade value of $100,000 for interbank foreign exchange (FX) trading via the Electronic Foreign Exchange Matching System (EFEMS).
The directive, dated November 25, 2024, was signed by Dr. Omolara Duke, Director of the CBN’s Financial Markets Department.
Dr. Duke explained that this move is part of the CBN’s efforts to enhance transparency, efficiency, and compliance within Nigeria’s FX market.
The EFEMS (Electronic Foreign Exchange Matching System) is designed to streamline interbank foreign exchange (FX) trading, mitigate counterparty risks, and ensure compliance with Central Bank of Nigeria (CBN) regulations.
Bloomberg’s BMatch has been appointed the official order-matching platform for interbank transactions, operating from 9:00 am to 4:00 pm West Africa Time on business days.
The minimum trade size on the platform is $100,000, with increments set at $50,000.
Initially, EFEMS will facilitate spot FX transactions exclusively between the Nigerian naira and the US dollar, although the CBN reserves the right to introduce additional currency pairs when deemed necessary.
According to the CBN guidelines:
- “All trades executed on EFEMS are binding unless cancelled by mutual agreement of both parties and with written approval from the CBN.
- “The minimum tradable amount is $100,000, with incremental clip sizes of $50,000.
- “Participants must establish credit and settlement limits for other counterparties within the system, as transactions exceeding these limits will not be processed.
- “Adequate credit and settlement limits must also be set for the CBN as a counterparty bank.
- “Participants are required to adhere to the Nigerian Foreign Exchange Code and all other CBN regulations.”
Participation in EFEMS is restricted to authorised dealer banks licensed by the CBN. Other institutions must secure prior approval before joining.
Participants are required to:
- Sign agreements with the CBN-approved platform provider.
- Maintain accurate profiles on the platform.
- Operate within designated credit and settlement limits.
Withdrawals from the platform require a 30-day notice and the settlement of any outstanding obligations.
Trades on EFEMS will remain anonymous until matched, with counterparty details disclosed only after transactions are finalised in line with settlement protocols.
Any transactions exceeding prescribed limits or outside EFEMS parameters must be reported and recorded in the FX blotter within 10 minutes.
The CBN emphasised its commitment to monitoring all transactions on EFEMS to uphold transparency and market integrity. Participants must submit daily reports, detailing trade volumes, settlement statuses, and counterparties.
The central bank retains the authority to publish aggregated or disaggregated trade data for market analysis, subject to confidentiality agreements.
Breaches of EFEMS rules or related regulations will attract strict penalties, including suspension or termination of access rights.
Additionally, the CBN stated it will conduct periodic reviews of the platform’s operations to ensure efficiency and compliance with its directives.
Bloomberg’s BMatch platform is set to officially launch as EFEMS for foreign exchange trading on December 2, 2024.
