Market News

The Central Bank of Nigeria (CBN) has introduced new guidelines for foreign exchange trading through its Electronic Foreign Exchange Matching System (EFEMS), effective November 25, 2024. Dr. Omolara Duke, Director of the Financial Markets Department, signed the directive to improve transparency, efficiency, and compliance in Nigeria’s foreign exchange market. Key highlights of the new guidelines include:

Trading Requirements: The CBN now requires a minimum trade value of $100,000 for interbank foreign exchange transactions, with incremental trades of at least $50,000. This approach aims to standardize trade sizes and reduce financial risks. Platform and Timing: Bloomberg’s BMatch will serve as the official platform for foreign exchange transactions. Trading will be permitted from 9:00 AM to 4:00 PM West Africa Time on business days. Initially, the system will only support transactions between the Nigerian naira and the US dollar, though this may expand in the future.

Participation Rules: Only authorised dealer banks licensed by the CBN can participate, and they must:

• Execute agreements with the platform provider
• Maintain accurate profiles, and
• Operate within specified credit and settlement limits

Important Trading Principles:

• All trades are binding unless mutually cancelled with CBN approval
• Trades remain anonymous until matched
• Participants must report and log transactions exceeding prescribed limits
• A 30-day notice is required for platform withdrawal

The Bloomberg BMatch system is scheduled to launch on December 2, 2024. The CBN emphasized that non-compliance could result in significant penalties, including potential publication of trade data. The ultimate goal is to enhance operational efficiency, improve market transparency, and provide better oversight of foreign exchange transactions in Nigeria.