The Central Bank of Nigeria (CBN) has introduced a new directive setting a minimum trade value of $100,000 for interbank foreign exchange transactions conducted via the Electronic Foreign Exchange Matching System (EFEMS).
This decision, announced on November 25, 2024, aims to enhance transparency, efficiency, and regulatory compliance in the country’s FX market.
Dr. Omolara Duke, CBN’s Director of the Financial Markets Department, emphasized that the move is designed to streamline the interbank FX trading process, reduce counterparty risks, and enforce compliance with CBN regulations. EFEMS will operate on Bloomberg’s BMatch, which has been designated as the official order-matching platform for these transactions. Trading will take place from 9:00 am to 4:00 pm West Africa Time on business days.
The new guidelines also specify that the $100,000 minimum trade comes with incremental clip sizes of $50,000. The platform will initially focus on spot FX transactions between the Nigerian naira and the U.S. dollar, with the CBN retaining the discretion to introduce other currency pairs as needed.
Key features of the EFEMS guidelines include:
- Binding trades unless mutually canceled with CBN approval.
- Participants must set credit and settlement limits for other counterparties, with transactions exceeding these limits not executed.
- All trades are anonymous until matched, with counterparty details revealed only after completion.
- Violations of the guidelines will result in penalties, including suspension or revocation of platform access.
Additionally, the CBN will closely monitor all transactions to ensure integrity and transparency. It will require daily reports on trade volumes, settlement statuses, and counterparties, and may publish aggregated trade data for market analysis, subject to confidentiality agreements.
The Bloomberg BMatch system is set to officially launch as the EFEMS platform for foreign exchange trading on December 2, 2024.
