The Central Bank of Nigeria (CBN) has issued a January 31 deadline to participants in the foreign exchange (FX) market to submit a compliance report on adherence to the Nigeria FX Code.
The 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, which came into effect 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.
It said the report must be endorsed by the participant’s board of directors and include an implementation plan to address any compliance gaps.
Also, institutions are required to provide extracts of the relevant board meeting minutes to demonstrate oversight.
The CBN also state that beyond the initial submission deadline, quarterly compliance reports must be filed with the CBN’s Financial Markets Department (FMD) and that such reports are due within 14 days of the end of each quarter, with the first report expected by March 31, 2025.
To ensure strict adherence, the CBN outlined enforcement mechanisms, including monetary penalties, as provided under the CBN Act 2007 and BOFIA Act 2020.
Others are that 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.