The Central Bank of Nigeria (CBN) has issued a directive requiring all participants in the foreign exchange (FX) market to submit a compliance report on adherence to the Nigeria FX Code by January 31, 2025.
This initiative is part of the apex bank’s ongoing efforts to promote ethical practices, enhance governance, and ensure transparency in Nigeria’s FX market.
Effective December 2, 2024, the Nigeria FX Code provides a framework of principles designed to foster a robust, fair, and transparent foreign exchange market.
The code applies to authorized dealers licensed under the CBN Act 2007, the Banks and Other Financial Institutions Act (BOFIA) 2020, and other entities engaged in wholesale FX operations.
The CBN emphasizes that compliance with the FX Code is essential for maintaining the integrity and efficiency of Nigeria’s foreign exchange market. According to the CBN’s directive, market participants must undertake the following steps:
- Self-Assessment and Reporting:
Participants are required to conduct a self-assessment of their compliance with the FX Code and submit a detailed report to the CBN by January 31, 2025. - Board Approval and Implementation Plan:
The compliance report must be approved and signed by the participant’s board of directors. It should also include an implementation plan to address any gaps in compliance, along with extracts from the board meeting minutes to confirm oversight. - Quarterly Reporting:
After the initial submission, participants must file quarterly compliance reports with the CBN’s Financial Markets Department (FMD). These reports are due within 14 days after the end of each quarter, with the first submission expected by March 31, 2025.
To ensure strict adherence, the CBN has outlined enforcement measures, including monetary penalties and administrative sanctions, as stipulated under the CBN Act 2007 and BOFIA 2020. Non-compliant institutions risk facing these consequences, underscoring the importance of aligning with the FX Code.
The implementation of the Nigeria FX Code marks a significant step toward improving governance and transparency in the FX market. By mandating regular reporting and emphasizing board-level accountability, the CBN aims to build trust and ensure the long-term stability of Nigeria’s foreign exchange market.