CBN directs authorised dealers to submit FX code compliance report by January 31

The Central Bank of Nigeria (CBN) has directed participants in the foreign exchange (FX) market to submit a compliance report on adherence to the Nigeria FX code by January 31.

CBN gave the directive in its ‘Nigeria FX Code’ published on Monday.

The financial regulator said the FX Code, which became effective on December 2, 2024, is aimed at strengthening and promoting the integrity and effective functioning of the wholesale FX market in Nigeria.

“It will facilitate better functioning of the market, further reinforcing Nigeria’s flexible exchange rate regime,” CBN said.

“The FX Code is issued as an FX market guideline pursuant to CBN Act 2007 and BOFIA Act 2020 which empowers the CBN to issue directions with respect to the standards to be adhered to by an institution in the conduct of foreign exchange business in Nigeria

“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 CBN a detailed compliance implementation plan that is approved and signed by its Board along with the extracts of the Board meeting.”

In terms of reporting, CBN said all authorised dealers also known as market participants will be required to submit a “quarterly report to the financial markets department (FMD), on the level of compliance to the FX Code within 14 days after the end of every quarter, with the first report due by March 31, 2025”.

The code further outlines principles of good practice to ensure a robust, fair, and transparent FX market.

Also, the code comprises six key principles, namely ethics, governance, execution, information sharing, risk management, compliance, and confirmation and settlement.

CBN said non-compliant participants may face administrative sanctions.

On January  23, Olayemi Cardoso, governor of CBN, said the bank has set up a compliance department to ensure transparency in the financial sector.

Cardoso also said the introduction of the FX code, the electronic foreign exchange matching system, and the foreign currency disclosure, deposit repatriation, and investment scheme, would enhance market efficiency and transparency.