Forex: CBN Introduces Electronic Transaction System To Reduce Speculations

The Central Bank of Nigeria (CBN) has announced the introduction of electronic foreign exchange matching system for Foreign Exchange (FX) transactions in the Nigerian Foreign Exchange Market (NFEM).

The new electronic platform is to be implemented not later than December 1, 2024, according to a circular that was signed by the director, financial markets department at the CBN, Omolara Duke, on Thursday night.

THE central bank said there will be a 2-week test running in the month of November 2024 for the scheme. CBN said authorised FX dealers would subsequently conduct all foreign exchange transactions in the interbank FX market on the electronic foreign exchange matching system approved by the apex bank where transactions will be reflected immediately.

The new system is expected to enhance governance, transparency and facilitate a market-driven exchange rate that will be accessible to the public.

“This development is expected to reduce speculative activities, eliminate market distortions and give the CBN improved oversight capabilities to effectively regulate the market,” Dr Duke stated.

The CBN said it will publish real-time prices and buy/sell orders data from the system, and in collaboration with the Financial Market Dealers Association (FMDA), publish the rules for the EFEMS.

The Nigerian FX code and revised market operating guidelines for the Nigeria Foreign Exchange Market will also provide guidance to market participants.

“Authorised Dealers are therefore required to comply with extant guidelines and regulations governing the Nigeria foreign exchange market, and ensure that all necessary documentation, training, and systems integrations are concluded ahead of the go live date,” she stated.