The Central Bank of Nigeria (CBN) has instructed foreign currency market players to provide compliance reports by January 31, 2025, detailing their adherence to the Nigeria FX Code.
The directive was created to improve market transparency, governance, and ethical behaviour.
With its implementation on December 2, 2024, the Nigeria FX Code lays out best practices to guarantee a strong, equitable, and open foreign exchange market.
The CBN Act of 2007 and the Bank and Other Financial Institutions Act of 2020 both grant licenses to authorised dealers, as well as other organisations that deal in wholesale foreign exchange in Nigeria.
Market players are required to self-evaluate and submit comprehensive reports on their degree of FX Code compliance, per the apex bank’s mandate.
These reports, which include an implementation plan for filling in any compliance gaps, need to be approved by the board of directors of the organisation.
Extracts from board meeting minutes must also be included to show responsibility and monitoring.
According to the FX Code paper, which was made public on Monday, “Market participants must self-evaluate and report to the CBN on the institution’s degree of FX Code compliance by January 31, 2025.
“A thorough compliance implementation plan that has been authorised and signed by its Board, as well as the board meeting extracts, must then be submitted to CBN by all market participants.”
The Central Bank’s Financial Markets Department will require market participants to submit quarterly compliance reports after the initial deadline of January 31.
The deadline for submitting these reports is 14 days following the conclusion of each calendar quarter; the first one is due on March 31, 2025.
As stipulated in the CBN Act of 2007 and the BOFIA Act of 2020, the Central Bank has delineated enforcement tools, including monetary penalties, to guarantee compliance with the code.
The procedures are intended to promote integrity in the foreign exchange market and remedy any non-compliance.
The Nigerian FX Code is based on the Global FX Code and takes into account international best practices while taking into account the unique characteristics of the Nigerian FX market.
Important topics including ethics, governance, execution, information exchange, risk management, and settlement procedures are all included in the code.
Market players must uphold the highest ethical standards, set up reliable governance frameworks, conduct transactions equitably, safeguard private data, and put strong risk management plans in place, according to the Central Bank.
