The Central Bank of Nigeria (CBN) has directed all participants in the foreign exchange (FX) market to submit compliance reports detailing their adherence to the Nigeria FX Code by January 31, 2025. This directive aims to enhance ethical practices, governance, and transparency in Nigeria’s FX market.
The Nigeria FX Code, which became effective on December 2, 2024, establishes principles of good practice to ensure a fair and robust FX market. It applies to authorized dealers licensed under the CBN Act of 2007, the Bank and Other Financial Institutions Act of 2020, and other entities involved in wholesale FX business in Nigeria.
As part of this compliance process, market participants are required to conduct a self-assessment and submit a detailed report to the CBN. This report must outline their level of adherence to the FX Code and include an implementation plan for addressing any identified gaps. Additionally, the reports must be approved by the institution’s board of directors, with extracts of board meeting minutes provided to demonstrate accountability.
The directive was detailed in the FX Code document, which stated: “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.”
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Following this initial deadline, participants must file quarterly compliance reports with the CBN’s Financial Markets Department. These quarterly reports are to be submitted within 14 days after the end of each calendar quarter, with the first set due by March 31, 2025.
To enforce adherence to the FX Code, the CBN has outlined penalties for non-compliance, as provided under the CBN Act of 2007 and the Bank and Other Financial Institutions Act of 2020. These measures are designed to maintain market integrity and promote best practices across the sector.
The Nigeria FX Code, modeled after the Global FX Code, incorporates international standards while addressing the unique dynamics of Nigeria’s FX market. It focuses on key areas such as ethics, governance, execution, information sharing, risk management, and settlement processes.
The Central Bank expects all market participants to uphold high ethical standards, implement sound governance structures, manage risks effectively, ensure fairness in transactions, and protect confidential information. The implementation of the FX Code marks a significant step in promoting transparency and accountability within Nigeria’s foreign exchange market.
