CBN fixes $100,000 minimum trade for Banks on forex platform

This directive, dated November 25, 2024, was signed by Dr. Omolara Duke, the Director of the Financial Markets Department at the CBN. Duke indicated that this initiative aims to enhance transparency, efficiency, and compliance in Nigeria’s foreign exchange market.

The EFEMS is intended to simplify interbank foreign exchange trading, mitigate counterparty risks, and ensure adherence to CBN regulations.

Additionally, CBN has designated Bloomberg’s BMatch as the official order-matching platform for interbank transactions, with trading hours set from 9:00 AM to 4:00 PM West Africa Time on business days.

The minimum tradable amount of $100,000 comes with incremental clip sizes of $50,000. The EFEMS will be limited to spot foreign exchange transactions involving the Nigerian naira and the United States dollar, although the CBN retains the right to introduce other currency pairs as necessary.

According to the guidelines, “All trades executed on EFEMS are binding unless canceled by mutual agreement between both parties with written approval from the CBN. The minimum tradable amount is $100,000, with incremental clip sizes of $50,000. Participants must establish credit and settlement limits for other counterparties in the system, and transactions exceeding these limits will not be executed. Furthermore, participants must maintain adequate credit and settlement limits for the CBN as their counterparty bank and comply with the Nigerian Foreign Exchange Code and other CBN regulations.”

Participation in the EFEMS is restricted to authorized dealer banks licensed by the CBN.

Other institutions wishing to join must obtain prior approval, execute agreements with the CBN-approved platform provider, maintain accurate profiles, and adhere to specified credit and settlement limits. Withdrawal from the platform requires a 30-day notice and resolution of any outstanding obligations.

Trades conducted through the platform will remain anonymous until matched, with counterparty details disclosed only after transactions are completed, in accordance with settlement protocols. Transactions that exceed established limits or occur outside EFEMS parameters must be reported promptly and logged on the FX blotter within 10 minutes.

The CBN emphasized its commitment to closely monitoring all transactions on EFEMS to uphold market integrity and transparency. Participants are required to submit daily reports detailing trade volumes, settlement statuses, and counterparties. The central bank retains the right to publish aggregated or disaggregated trade data for market analysis, in line with confidentiality agreements.

Violations of EFEMS guidelines or related regulations will result in strict penalties, including the suspension or revocation of access rights. The CBN will also periodically review the platform’s operations to ensure efficiency and compliance with its directives.

Finally, the CBN announced that the Bloomberg BMatch system will officially launch as the EFEMS for foreign exchange trading on December 2, 2024.