BREAKING: CBN asks FX market participants to submit compliance report before January 31 

This directive is part of the apex bank’s efforts to strengthen ethical practices, governance, and transparency in the FX market.

According to the FX Code document released on Monday, “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.” 

The Nigeria FX Code, effective from December 2, 2024, outlines principles of good practice to ensure a robust, fair, and transparent FX market. It applies to authorised dealers licensed under the CBN Act 2007, the Bank and Other Financial Institutions Act 2020, and other institutions engaged in wholesale FX business.

The CBN mandates market participants to perform a self-assessment and submit a compliance report detailing their adherence to the code. This report must be endorsed by the participant’s board of directors and include an implementation plan to address any compliance gaps. Institutions are also required to provide extracts of the relevant board meeting minutes to demonstrate oversight.

Beyond the initial submission deadline, quarterly compliance reports must be filed with the CBN’s Financial Markets Department (FMD). These reports are due within 14 days of the end of each quarter, with the first report expected by March 31, 2025.

Enforcement and penalties 

To ensure strict adherence, the CBN has outlined enforcement mechanisms, including monetary penalties, as provided under the CBN Act 2007 and BOFIA Act 2020. Non-compliant participants may face administrative sanctions, further underscoring the importance of adhering to the FX Code.

The Nigeria FX Code is modelled on the Global FX Code, incorporating global best practices while addressing the unique dynamics of Nigeria’s FX market. The code is built around six key principles:

Strengthening market integrity