In furtherance of regulatory measures to promote ethical practices, transparency and corporate governance principles in Nigeria’s foreign exchange (FX) transactions, the Central Bank of Nigeria (CBN) has ordered participants in the FX market to submit compliance reports on adherence to the Nigeria FX Code by January 31 this year.
The Nigeria FX Code, which applies to authorised dealers licensed under the CBN Act of 2007, the Bank and Other Financial Institutions Act (BOFIA) 2020, and other entities engaged in wholesale FX business in Nigeria, became effective on December 2, 2024, and sets out principles of good practice to ensure a robust, fair, and transparent transactions in the FX market.
The Nigeria FX Code is modelled on the Global FX Code and incorporates global best practices while addressing the peculiar dynamics of the Nigerian FX market
Based on the guidelines of the FX Code, participants were mandated by the apex bank to conduct a self-assessment and submit detailed reports on their level of compliance with the Code.
The reports must be approved by the participation bank of financial institution’s board of directors, include an implementation plan for addressing any gaps in compliance as well as extracts of board meeting minutes must be provided to demonstrate oversight and accountability.
The FX Code report filing requirement, which was released by the apex bank on Monday, 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”, it added.
Based on the deadline of January 31, market participants will be required to file quarterly compliance reports with the Financial Markets Department of the CBN and the reports are expected to be submitted within 14 days after the end of each calendar quarter, with the first set due by March 31, 2025.
To ensure strict compliance with the requirements of the FX Code, the apex bank has spelt out some enforcement mechanisms, including monetary penalties as provided under the CBN Act of 2007 and the BOFIA Act of 2020, to promote best ethical practices in the FX market.