The Central Bank of Nigeria (CBN) has instructed participants in the foreign exchange market to submit compliance reports on their adherence to the Nigeria FX Code by January 31, 2025.
This directive is part of efforts to enhance ethical practices, governance, and transparency in the market.
The Nigeria FX Code, which took effect on December 2, 2024, outlines principles of good practice to ensure a fair, transparent, and robust foreign exchange market.
It applies to authorized dealers licensed under the CBN Act of 2007, the Bank and Other Financial Institutions Act of 2020, and other entities engaged in wholesale FX transactions in Nigeria.
The CBN has mandated market participants to perform a self-assessment and submit detailed reports on their compliance with the FX Code.
These reports must be signed off by the institution’s board of directors and include an implementation plan to address any compliance gaps.
Additionally, extracts from board meeting minutes must be provided to demonstrate oversight and accountability.
The FX Code document, released on Monday, 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 then need to submit a detailed compliance implementation plan, approved and signed by the Board, along with extracts from the Board meeting.”
Following the initial deadline, participants will be required to submit quarterly compliance reports to the CBN’s Financial Markets Department. These reports must be filed within 14 days of the close of each calendar quarter, with the first set due by March 31, 2025.
To ensure adherence to the FX Code, the CBN has outlined enforcement mechanisms, including monetary penalties under the CBN Act of 2007 and the BOFIA Act of 2020.
These measures are intended to address any instances of non-compliance and promote integrity within the foreign exchange market.
The Nigeria FX Code is based on the Global FX Code and integrates global best practices while addressing the unique dynamics of the Nigerian FX market.
The code covers crucial areas such as ethics, governance, execution, information sharing, risk management, and settlement processes.
The CBN expects market participants to uphold high ethical standards, implement sound governance structures, conduct transactions fairly, protect confidential information, and establish robust risk management frameworks.