The Central Bank of Nigeria (CBN) has taken a significant step towards modernizing the Nigerian foreign exchange market with the release of a new FX Code. This comprehensive set of guidelines aims to enhance market liquidity, transparency, and overall integrity, bringing Nigeria’s FX market practices in line with international best practices.
Recognizing the evolving financial landscape and the need for a robust regulatory framework, the CBN developed the FX Code to address potential risks and ensure the efficient functioning of the wholesale FX market. The code emphasizes ethical conduct, robust governance, and transparent execution of foreign exchange transactions.
Key principles outlined in the FX Code include:
- Ethical Conduct: Market participants are expected to adhere to the highest ethical standards, ensuring fair and transparent dealings.
- Strong Governance: Institutions must establish clear and effective internal controls to oversee their foreign exchange operations responsibly.
- Transparent Execution: All transactions must be conducted with due diligence and transparency, fostering a level playing field for all market participants.
- Effective Communication: Open and accurate communication is crucial, while maintaining the confidentiality of sensitive information.
- Robust Risk Management: Market participants must have robust systems in place to identify, assess, and mitigate risks associated with foreign exchange transactions.
- Efficient Settlement: Timely and accurate settlement of transactions is essential for a well-functioning market.
By adhering to these principles, the CBN aims to create a more competitive and efficient FX market that inspires confidence among investors and supports Nigeria’s economic growth. This move underscores the CBN’s commitment to fostering a sound and stable financial system that can withstand global challenges.
