Kehinde Fajobi
The Central Bank of Nigeria (CBN) has instructed foreign exchange market participants to submit compliance reports on the Nigeria FX Code by January 31, 2025.
This move is part of efforts to enhance transparency, governance, and ethical practices in the sector.
Effective from December 2, 2024, the Nigeria FX Code establishes principles to ensure fairness and accountability in the forex market. It applies to authorised dealers under the CBN Act of 2007, the Bank and Other Financial Institutions Act of 2020, and other entities engaged in wholesale foreign exchange activities.
The CBN directed market participants to conduct self-assessments and provide detailed compliance reports, endorsed by their boards of directors.
These reports must highlight their adherence to the FX Code and include action plans to address any gaps.
Extracts of board meeting minutes must also be submitted to demonstrate oversight and accountability.
According to a document released on Monday, the CBN stated: “Market Participants will be required to conduct a self-assessment and submit to the CBN a report on the institution’s level of compliance with the FX Code by January 31, 2025.
“All Market Participants will thereafter be required to submit to CBN a detailed compliance implementation plan that is approved and signed by its Board along with the extracts of the Board meeting.”
Following this initial deadline, market participants are expected to file quarterly compliance updates with the Financial Markets Department of the CBN.
These reports must be submitted within 14 days after each calendar quarter, with the first set due by March 31, 2025.
The CBN has also outlined enforcement measures, including monetary penalties for non-compliance, as permitted under the CBN Act of 2007 and the BOFIA Act of 2020.
The Nigeria FX Code, inspired by the Global FX Code, incorporates international best practices while addressing the unique aspects of Nigeria’s forex market.
It covers ethics, governance, fair execution, risk management, information confidentiality, and settlement processes.
The apex bank expects market participants to uphold high ethical standards, establish sound governance structures, ensure fairness in transactions, protect sensitive information, and implement effective risk management systems.