- The Central Bank of Nigeria has issued new guidelines for trading on its EFEMS platform
- The new guidelines mandate a $100,000 minimum trade
- The apex bank also designated Bloomberg’s BMatch as the official trading platform
The Central Bank of Nigeria (CBN) has mandated $100,000 as minimum trade on its Electronic Foreign Exchange Matching System (EFEMS) platform in new guidelines for interbank foreign exchange (forex) transactions, effective from November 25, 2024.
This is contained in a new directive signed by Dr Omolara Duke, the Director of the Financial Markets Department of the CBN.
The CBN also set incremental clip sizes of $50,000, which participants must adhere to in the new guideline.
It said the move is to enhance market transparency, ensure efficient trading and strengthen compliance within Nigeria’s forex market, streamlining trading and reducing risks.
It said, “All trades consummated on EFEMS are binding unless cancelled by mutual agreement of both parties with written approval from the CBN.
“The minimum tradable amount is US$100,000.00, with incremental clip sizes of US$50,000.00.
“Participants must set credit and settlement limits for other counterparties in the system. Transactions exceeding these limits will not be executed.
“Participants must have adequate credit and settlement limits set for the CBN as its counterparty bank.
“Participants are required to comply with the Nigerian Foreign Exchange Code and other CBN regulations.”
CBN designates Bloomberg’s BMatch as the official trading platform
The apex bank also appointed Bloomberg’s BMatch as the official order-matching platform for transactions, effective December 2, 2024, with trading hours set between 9:00 AM and 4:00 PM West Africa Time (WAT) on business days.
Bloomberg’s BMatch system aims to facilitate seamless and uniform trading among market participants, while also enabling the CBN to efficiently monitor market performance and manage data.
The CBN urged all authorised dealers and banks to liaise with Bloomberg representatives to expedite the onboarding process and immediately address any technical or operational issues.
According to the CBN, the EFEMS platform will be limited to spot forex transactions involving the naira and the United States dollar (USD), although the CBN reserves the right to introduce other currency pairs in the future if deemed necessary.
Criteria for participation and access to the platform
The CBN further noted that participation in the EFEMS is limited to authorised dealer banks that are licensed by the CBN, while other financial institutions interested in joining the platform must obtain prior approval from the bank.
The guidelines stipulated that all participants must execute agreements with the CBN-approved platform provider, maintain accurate profiles and operate within prescribed credit and settlement limits.
It added that a participant who wishes to withdraw from the platform must provide a 30-day notice and resolve any outstanding obligations before exiting.
There are penalties for non-compliance
The guidelines also noted that the CBN will closely monitor all trades conducted on EFEMS to ensure market integrity and transparency.
It said participants are obligated to submit daily reports detailing trade volumes, settlement statuses and counterparties.
Also, any violation of the EFEMS guidelines or related regulations attracts penalties, which include the suspension or revocation of access rights to the platform.
The CBN also reserves the right to publish aggregated or disaggregated trade data for market analysis, subject to confidentiality agreements.
CBN, SEC sanction 10 banks for forex violations
Meanwhile, TheRadar reported that the regulatory agencies responsible for overseeing the activities of deposit money banks in Nigeria sanctioned 10 banks for violations of foreign exchange guidelines and other regulatory offences.
These agencies, including the Central Bank of Nigeria and the Securities and Exchange Commission, imposed fines totalling N1.502 billion as penalties within the first six months of 2024.
