Nigeria: CBN Sets January 31 Deadline for FX Market Compliance Reports

The Central Bank of Nigeria (CBN) has directed all participants in the foreign exchange market to submit compliance reports on their adherence to the Nigeria FX Code by January 31, 2025.

This directive is part of the CBN’s broader initiative to enhance ethical standards, governance, and transparency within the FX market.

The Nigeria FX Code, which took effect on December 2, 2024, outlines key principles to promote a fair, transparent, and resilient foreign exchange market. It applies to authorized dealers operating under the CBN Act of 2007, the Banks and Other Financial Institutions Act (BOFIA) of 2020, and entities involved in wholesale FX transactions.

The CBN has mandated that market participants conduct self-assessments and submit comprehensive compliance reports to ensure adherence. The institution’s board must approve these reports of directors and should include a structured implementation plan to address any compliance gaps. Additionally, extracts from board meeting minutes must be provided to demonstrate governance oversight.

A section of the FX Code released by the CBN states:

“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.”

Beyond the initial deadline, market participants will be required to submit quarterly compliance reports to the Financial Markets Department of the CBN. These reports must be submitted within 14 days after the end of each calendar quarter, with the first set due by March 31, 2025.

To enforce compliance, the CBN has outlined measures, including monetary penalties as stipulated in the CBN Act of 2007 and the BOFIA Act of 2020. These penalties aim to ensure strict adherence to the code while fostering market integrity.

Modelled after the Global FX Code, the Nigeria FX Code integrates international best practices while addressing Nigeria’s unique FX market dynamics. It covers critical areas such as ethics, governance, execution standards, information security, risk management, and settlement procedures.

The CBN expects all FX market participants to uphold high ethical standards, establish robust governance structures, execute transactions fairly, safeguard confidential information, and implement effective risk management frameworks.