CBN Launches New Electronic Foreign Exchange Matching System to Reduce Speculation
Overview of CBN's Electronic Foreign Exchange Matching System
The Central Bank of Nigeria (CBN) has announced the introduction of the Electronic Foreign Exchange Matching System (EFEMS) for foreign exchange transactions in the Nigerian Foreign Exchange Market (NFEM). This system is set to be implemented no later than December 1. According to Omolara Duke, Director of the Financial Markets Department, the new system aims to enhance governance, transparency, and a market-driven exchange rate.
Objectives and Benefits of EFEMS
- The EFEMS is expected to significantly reduce speculative activities in the foreign exchange market.
- It will eliminate existing market distortions and provide the CBN with improved oversight capabilities.
- All foreign exchange transactions in the interbank FX market will be conducted through EFEMS, providing immediate transaction reflections.
Implementation Timeline
- A two-week test run is scheduled for November, prior to the full launch.
- Real-time pricing will be published once EFEMS commences operations.
- In collaboration with the Financial Markets Dealers Association (FMDA), the CBN will publish transaction rules for EFEMS.
Regulatory Compliance
The Nigerian FX Code and revised Market Operating Guidelines will guide market participants. It is essential for authorized dealers to adhere to current guidelines and regulations. They must also ensure that all necessary documentation, training, and systems integrations are completed before the launch date.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.