The Central Bank of Nigeria (CBN) has announced the establishment of a minimum trade value of $100,000 for interbank foreign exchange (FX) transactions conducted through the Electronic Foreign Exchange Matching System (EFEMS). The directive, issued on November 25, 2024, is aimed at enhancing transparency, efficiency, and compliance in Nigeria’s FX market.
The CBN’s Director of the Financial Markets Department Omolara Duke, signed the notice, which outlines the key features and operational guidelines for EFEMS. The platform is designed to streamline interbank FX trading, minimize counterparty risks, and ensure strict adherence to CBN regulations.
The CBN has designated Bloomberg’s BMatch as the official order-matching platform for interbank FX transactions. Trading will occur between 9:00 AM and 4:00 PM West Africa Time on business days. The $100,000 minimum trade amount comes with incremental clip sizes of $50,000, ensuring flexibility for participants while maintaining substantial transaction volumes.
EFEMS will initially focus on spot FX transactions between the Nigerian naira and the United States dollar. However, the CBN retains the discretion to introduce additional currency pairs if necessary, expanding the platform’s scope in the future.
The CBN’s guidelines emphasize that all trades on EFEMS will be binding, unless canceled by mutual agreement between both parties, with written approval from the CBN. It also mandates participants to set appropriate credit and settlement limits for their counterparties to ensure the platform’s smooth operation.
Participation in EFEMS is limited to authorized dealer banks that are licensed by the CBN. Other financial institutions wishing to join the platform must first obtain approval from the CBN and enter into agreements with the CBN-approved platform provider. All participants must operate within established credit and settlement limits and comply with the Nigerian Foreign Exchange Code and other CBN regulations.
To maintain the integrity of the platform, trades conducted through EFEMS will remain anonymous until matched, with counterparty details disclosed only after the transaction is completed. Additionally, any trades exceeding set limits or conducted outside the platform’s parameters must be reported within 10 minutes and logged onto the FX blotter for monitoring purposes.
The CBN has emphasized that it will closely monitor transactions on EFEMS to ensure transparency and market integrity. Participants will be required to submit daily reports detailing trade volumes, settlement statuses, and counterparties.
The CBN reserves the right to publish aggregated or disaggregated trade data for market analysis, provided confidentiality agreements are upheld. Any violations of the platform’s guidelines or related regulations will result in penalties, which could include the suspension or revocation of access rights.
The CBN has confirmed that the Bloomberg BMatch system will officially go live as the EFEMS for foreign exchange trading on December 2, 2024.
This move marks a significant step toward modernizing Nigeria’s FX market and ensuring greater compliance with global trading standards.
