The Central Bank of Nigeria (CBN) has introduced a new directive setting a minimum trade value of $100,000 for interbank foreign exchange (FX) trading through the Electronic Foreign Exchange Matching System (EFEMS).
This directive, dated November 25, 2024, was signed by Dr. Omolara Duke, the Director of the Financial Markets Department at the CBN.
According to Dr. Duke, the new development is part of the CBN’s broader efforts to ensure “transparency, efficiency, and compliance” within Nigeria’s foreign exchange market. She emphasized that the EFEMS is designed to streamline interbank FX trading, reduce counterparty risks, and ensure that all transactions adhere to CBN regulations.
The CBN also announced that Bloomberg’s BMatch system has been designated as the official order-matching platform for interbank transactions. Trading will be conducted between 9:00 am and 4:00 pm West Africa Time on business days.
In the directive, the CBN outlined several key features of the new system, including the $100,000 minimum tradable amount with incremental clip sizes of $50,000. Additionally, the EFEMS will be restricted to spot FX transactions involving the Nigerian naira and the United States dollar. However, the CBN noted that it retains the discretion to introduce other currency pairs as needed.
The guidelines document issued by the CBN reads, “All trades consummated on EFEMS are binding unless canceled by mutual agreement of both parties with written approval from the CBN.”
It continued, “The minimum tradable amount is US$100,000.00, with incremental clip sizes of US$50,000.00. Participants must set credit and settlement limits for other counterparties in the system. Transactions exceeding these limits will not be executed.”
Participants must also have sufficient credit and settlement limits set for the CBN as its counterparty bank.
Furthermore, all participants are required to comply with the Nigerian Foreign Exchange Code and other CBN regulations.
Participation in the EFEMS is limited to authorised dealer banks that are licensed by the CBN.
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Any other institutions wishing to join the platform must first obtain approval. They must execute agreements with the CBN-approved platform provider, maintain accurate profiles, and operate within prescribed credit and settlement limits.
The CBN also specified that withdrawal from the platform requires a 30-day notice and the resolution of any outstanding obligations. “Withdrawal from the platform must be preceded by a 30-day notice, along with the resolution of any outstanding obligations,” the document stated.
For anonymity and privacy, trades conducted via the platform will remain anonymous until matched. Counterparty details will only be revealed once transactions are concluded, in accordance with settlement protocols.
Transactions that exceed the set limits or fall outside the EFEMS parameters must be promptly reported and logged onto the FX blotter within 10 minutes.
The CBN emphasized its commitment to closely monitoring all transactions to ensure market integrity and transparency.
Participants will be required to submit daily reports detailing trade volumes, settlement statuses, and counterparties.
The central bank also reserved the right to publish aggregated or disaggregated trade data for market analysis, subject to confidentiality agreements.
The CBN stated that any violations of the EFEMS guidelines or related regulations would lead to strict penalties, including the suspension or revocation of access rights. Furthermore, the CBN will periodically review the platform’s operations to ensure its efficiency and compliance with the established directives.
Finally, the CBN announced that the Bloomberg BMatch system will officially go live as the EFEMS for foreign exchange trading on December 2, 2024.
