The Central Bank of Nigeria (CBN) has instructed participants in the foreign exchange (FX) market to submit compliance reports on their adherence to the Nigeria FX Code by January 31, 2025, in a bid to strengthen ethical practices, governance, and transparency in the market.
The Nigeria FX Code, which became effective on December 2, 2024, outlines principles of good practice designed to ensure a fair, transparent, and robust FX market. It applies to authorized dealers licensed under the CBN Act of 2007, the Bank and Other Financial Institutions Act (BOFIA) of 2020, and other entities engaged in wholesale FX business in Nigeria.
In a statement released on Monday, the apex bank emphasized that market participants must conduct a self-assessment of their compliance with the FX Code and submit a detailed report by January 31, 2025. The reports, which must be signed off by the institution’s board of directors, should include an implementation plan to address any gaps in compliance. Additionally, extracts from board meeting minutes must be provided to demonstrate oversight and accountability.
The FX Code document outlined the following directive: “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 thereafter be required to submit to the CBN a detailed compliance implementation plan that is approved and signed by its Board, along with the extracts of the Board meeting.”
After the initial submission deadline, market participants will be required to file quarterly compliance reports with the CBN’s Financial Markets Department. These reports must be submitted within 14 days after the end of each calendar quarter, with the first report due by March 31, 2025.
To enforce compliance, the CBN has outlined penalties, including monetary fines, as stipulated under the CBN Act of 2007 and the BOFIA Act of 2020. These measures are aimed at promoting integrity and addressing any non-compliance within the FX market.
The Nigeria FX Code is modeled on the Global FX Code and incorporates international best practices while addressing the specific needs and dynamics of the Nigerian FX market. The code covers key areas such as ethics, governance, execution, information sharing, risk management, and settlement processes.
Through this initiative, the CBN expects market participants to uphold high ethical standards, establish strong governance structures, ensure fair transaction handling, protect confidential information, and implement effective risk management strategies.
