Nigeria: CBN Sets $100,000 Minimum Trade Limit on New Electronic FX Platform

The Central Bank of Nigeria (CBN) has announced the introduction of a minimum trade threshold of $100,000 for transactions conducted on its newly adopted Electronic Foreign Exchange Matching System (EFEMS). The system, set to go live on December 2, 2024, will utilize the Bloomberg BMatch platform to facilitate foreign exchange (FX) trading activities.

Key Highlights of the EFEMS Guidelines

1. Minimum Trade Threshold:
   • The lowest tradable amount is $100,000, with incremental clip sizes of $50,000.
   • Transactions must adhere to the specified credit and settlement limits set by counterparties. Trades exceeding these limits will not be executed.
2. Platform Deployment:
   • Effective December 2, 2024, authorized dealers in the interbank FX market must adopt the Bloomberg BMatch platform for their FX trading activities.
   • The platform aims to enhance transparency, operational efficiency, and market integrity by automating trade matching processes.
3. Regulatory Oversight:
   • The EFEMS will enable the CBN to monitor market performance and manage data more effectively, reinforcing its regulatory role.

CBN’s Circular to Authorized Dealers

In a circular signed by Dr. Omolara Duke, Director of the Financial Markets Department, the CBN emphasized the transformative potential of the Bloomberg BMatch platform:

“The Bloomberg BMatch platform will enhance the integrity and operational efficiency of the FX market by providing transparent and automated matching of trades, leading to market efficiency and greater price discovery,” the circular stated.

The directive also urged all banks participating in the interbank FX market to ensure seamless deployment of the platform for uniformity and efficient trading among market participants.

Strategic Objectives

The adoption of EFEMS aligns with the CBN’s broader goal of fostering a transparent and competitive FX market. By implementing automated systems, the CBN aims to address inefficiencies, reduce manual interventions, and support real-time market monitoring.

This development represents a significant step towards modernizing Nigeria’s FX trading ecosystem, promoting confidence among market participants, and ensuring a fair and regulated trading environment.