The Central Bank of Nigeria (CBN) has issued a directive to foreign currency market participants to submit compliance reports by January 31, 2025, outlining their adherence to the Nigeria FX Code. The aim of this directive is to enhance market transparency, governance, and ethical conduct.
The Nigeria FX Code, which came into effect on December 2, 2024, sets out a framework of best practices to ensure a robust, fair, and transparent foreign exchange market. Authorized dealers and other institutions engaged in wholesale foreign exchange transactions in Nigeria are required to comply with this code as per the CBN Act of 2007 and the Bank and Other Financial Institutions Act of 2020.
Market players are tasked with conducting self-assessments and submitting detailed reports on their level of compliance with the FX Code as mandated by the central bank. These reports must include an action plan for addressing any compliance gaps and be approved by the organization’s board of directors. Extracts from board meeting minutes demonstrating oversight and accountability must also be included in the submission.
The deadline for the initial compliance report submission is January 31, 2025, with subsequent quarterly reports due within 14 days after the end of each calendar quarter. The first quarterly report is expected to be submitted by March 31, 2025. Failure to comply with the code may result in enforcement measures, including monetary penalties, outlined in the CBN Act of 2007 and the BOFIA Act of 2020.
The Nigerian FX Code, which is aligned with the Global FX Code and tailored to the Nigerian market’s specific characteristics, covers key areas such as ethics, governance, execution, information sharing, risk management, and settlement processes. Market participants are required to adhere to high ethical standards, establish robust governance frameworks, conduct transactions fairly, protect sensitive information, and implement effective risk management strategies to ensure market integrity.
The Central Bank’s Financial Markets Department will oversee the enforcement of the code and monitor compliance among market participants. By fostering a culture of transparency, accountability, and integrity, the Nigeria FX Code aims to promote a healthy and sustainable foreign exchange market that benefits all stakeholders.
