October 04, (THEWILL) – The Central Bank of Nigeria (CBN) has announced the introduction of an Electronic Foreign Exchange Matching System (EFEMS) for all foreign exchange (FX) transactions within the Nigerian Foreign Exchange Market (NFEM).
Set for implementation on December 01, 2024, after a two-week test run scheduled for November, the new system is expected to enhance governance and transparency and facilitate a market-driven exchange rate that will be accessible to the public.
“There will be a 2-week test run in the month of November 2024. Authorised Dealers would subsequently conduct all foreign exchange transactions in the interbank Fx market on the Electronic Foreign Exchange Matching System approved by the CBN where transactions will be reflected immediately,” a circular dated October 2, 2024, addressed to all authorised dealers, and signed by CBN Director, Financial Markets Department, Dr. Jake Omolara O. Duke, stated.
This strategic move comes as part of the CBN’s continuous efforts to modernise and stabilise the foreign exchange market, ensuring that it operates with maximum efficiency, integrity, and fairness. According to the bank, the EFEMS will allow transactions to be reflected in real-time, providing market participants and regulators with immediate access to FX transaction data.
“Once operational, all FX transactions in the interbank market will be conducted through the EFEMS, with transactions reflected in real-time. The system is expected to curb speculative activities, reduce market distortions, and provide the CBN with improved oversight capabilities for regulating the market effectively.
“The CBN will publish real-time data on prices and buy/sell orders from the EFEMS. Additionally, in collaboration with the Financial Markets Dealers Association (FMDA), the CBN will release the rules for operating the system. The Nigerian FX Code and revised Market Operating Guidelines will also offer guidance to market participants.
“Authorised dealers are required to ensure full compliance with the existing guidelines governing the Nigerian foreign exchange market and must complete all necessary documentation, training, and system integrations ahead of the December go-live date.
“This development is anticipated to reshape the FX landscape in Nigeria, promoting a more transparent and efficient foreign exchange market,” it added.
