*The Central Bank of Nigeria directs market participants to conduct a self-assessment and submit a report on the institution鈥檚 level of compliance with the Foreign Exchange Code to the banking sector regulator by January 31, 2025

Isola Moses | 绿帽献妻

In a bid to strengthen ethical practices, governance, and transparency in the Foreign Exchange (Forex) market in the West African country, the Central Bank of Nigeria (CBN) has directed market participants to submit their Forex Code compliance report by January 31, 2025.

绿帽献妻 reports the CBN said the principal reason for the introduction of the Nigeria Forex Code is to ensure strict compliance in the Foreign Exchange ecosystem.

The banking sector regulator also noted that the directive is part of its efforts

In the FX Code document released Monday, the banking sector regulator stated: 鈥淢arket Participants will be required to conduct a self-assessment and submit to the CBN a report on the institution鈥檚 level of compliance with the FX Code by January 31, 2025.

鈥淎ll Market Participants will thereafter be required to submit to CBN a detailed compliance implementation plan that is ap颅proved and signed by its Board along with the extracts of the Board meeting.鈥�

The Nigeria FX Code, effective from December 2, 2024, outlines principles of good practice to ensure a robust, fair, and transparent FX market in the country.

The directive also applies to authorised dealers licensed under the CBN Act 2007, the bank and Other Financial Institutions Act 2020, and other institutions en颅gaged in wholesale FX business.

What鈥檚 in CBN鈥檚 Forex Code compliance directive?

The CBN, in the FX Code document, mandates market participants to perform a self-assessment and submit a compliance report detailing their adherence to the code.

According to CBN, such a report must be endorsed by the participant鈥檚 Board of Directors and include an implementation plan to address any compliance gaps. Institutions are also required to provide extracts of the relevant board meeting minutes to demonstrate oversight.

Beyond the initial submission deadline, quarterly compliance reports must be filed with the CBN鈥檚 Financial Markets Department (FMD).

These reports are due within 14 days of the end of each quarter, with the first report expected by March 31, 2025.

To ensure strict adherence, the CBN has outlined enforce颅ment mechanisms, including monetary penalties, as provided under the CBN Act 2007 and BOFIA Act 2020.

Non-compliant participants may face administrative sanctions, further underscoring the importance of adhering to the FX Code.

The Nigeria FX Code is modelled on the Global FX Code, incorporating global best practices while addressing the unique dynamics of Nigeria鈥檚 FX market.

The code is built around six key principles such as ethics, governance, execution, information sharing, risk management and compliance as well as confirmation and settlement.

The CBN鈥檚 directive highlights its commitment to promoting a more resilient and transparent FX market.

The FX Code aims to foster confidence among market participants, ensuring that transac颅tions reflect competitive pricing and align with global behavioural standards.

The Bankers鈥� Bank as well urged the market participants to align their operations with the principles outlined in the FX Code to avoid penalties and support the overall stability of Nigeria鈥檚 FX market.

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