CBN units new tips for FX buying and selling through EFEMS, mandates $100,000 minimal commerce 

The Central {Bank} of Nigeria (CBN) has introduced contemporary tips for interbank international alternate (FX) buying and selling through its Digital International Change Matching System (EFEMS), efficient from November 25, 2024.

The brand new directive, signed by Dr. Omolara Duke, Director of the {Financial} Markets Division, mandates a minimal commerce worth of $100,000 for all interbank FX transactions.

This transfer is geared toward enhancing market transparency, guaranteeing environment friendly buying and selling, and strengthening compliance inside Nigeria’s FX market.

EFEMS goals to streamline buying and selling and scale back dangers 

The newly issued tips are designed to streamline interbank FX buying and selling and scale back counterparty dangers. By utilizing EFEMS, the CBN goals to create a extra clear and orderly FX market whereas adhering to its regulatory framework.

The CBN has designated Bloomberg’s BMatch because the official order-matching platform for these transactions, with buying and selling hours set between 9:00 AM and 4:00 PM West Africa Time (WAT) on enterprise days.

A key provision within the tips is the institution of a $100,000 minimal tradable quantity per transaction. Moreover, the CBN has set incremental clip sizes of $50,000, which individuals should adhere to. The EFEMS platform will probably be restricted to identify FX transactions involving the Nigerian naira (NGN) and america greenback (USD), though the CBN reserves the appropriate to introduce different forex pairs sooner or later if deemed obligatory.

The rules doc learn, “All trades consummated on EFEMS are binding except canceled by mutual Bargain of each events with written approval from the CBN. 

“The minimal tradable quantity is US$100,000.00, with incremental clip sizes of US$50,000.00. 

“Contributors should set credit score and settlement limits for different counterparties within the system. Transactions exceeding these limits won’t be executed. 

“Contributors should have ample credit score and settlement limits set for the CBN as its counterparty {bank}. 

“Contributors are required to adjust to the Nigerian International Change Code and different CBN laws.”   

Key options of the EFEMS tips 

The rules define a number of essential operational protocols for individuals:

• Binding Trades: All trades executed on EFEMS are binding except mutually canceled by each events with written approval from the CBN.

• Credit score and Settlement Limits: Contributors are required to set credit score and settlement limits for counterparties inside the system. Transactions that exceed these limits won’t be executed. Comparable limits should even be set for the CBN as a counterparty {bank}.

• Compliance with CBN Laws: All individuals should adhere to the Nigerian International Change Code and different related CBN laws.
• Anonymity and Reporting: Trades performed through EFEMS will stay nameless till matched, with counterparty particulars revealed solely after transactions are accomplished in accordance with settlement protocols. Moreover, any transactions exceeding set limits or performed exterior the prescribed parameters have to be promptly reported and logged on the FX blotter inside 10 minutes.

Participation standards and platform Entry 

Participation within the EFEMS is restricted to licensed seller banks which are licensed by the CBN. Different {financial} establishments concerned with becoming a member of the platform should get hold of prior approval from the CBN.

All individuals are required to execute agreements with the CBN-approved platform supplier, preserve correct profiles, and function inside prescribed credit score and settlement limits. Ought to a participant want to withdraw from the platform, they have to present a 30-day discover and resolve any excellent obligations earlier than exiting.

Monitoring and penalties for non-compliance 

The CBN has emphasised that it’ll carefully monitor all trades performed on EFEMS to make sure market integrity and transparency. Contributors are obligated to submit every day reviews detailing commerce volumes, settlement statuses, and counterparties. Any violation of the EFEMS tips or associated laws will result in strict penalties, together with the suspension or revocation of entry rights to the platform.

The CBN additionally reserves the appropriate to publish aggregated or disaggregated commerce knowledge for market evaluation, topic to confidentiality agreements.

Bloomberg BMatch to go stay on December 2, 2024 

• In a associated improvement, the CBN introduced that the Bloomberg BMatch system will formally go stay because the EFEMS for international alternate buying and selling on December 2, 2024.
• The system goals to facilitate seamless and uniform buying and selling amongst market individuals, whereas additionally enabling the CBN to effectively monitor market efficiency and handle knowledge.
• The central {bank} has urged all licensed sellers and banks to liaise with Bloomberg representatives to expedite the onboarding course of and handle any technical or operational points promptly.
• This transfer is anticipated to considerably enhance the FX market’s operational effectivity and transparency, whereas additional enhancing the CBN’s oversight capabilities.