By Ayo Kehinde
The Central Bank of Nigeria (CBN) has formally launched the Nigerian Foreign Exchange (FX) Code, a guide to a transparent foreign exchange policy market.
CBN Governor, Olayemi Cardoso, joined by Managing Directors of Deposit Money Banks (DMBs), launched the code at the CBN Head Office Auditorium in Abuja on Tuesday.
The FX code, a 52-page document signed by all banks’ CEOs for market integrity, was released last week by the apex bank.
In a goodwill message, the Chairman of Zenith Bank Plc, Chief Jim Ovia, described the forex exchange code as a blessing to both CBN and the banking sector.
According to the apex bank, “The FX Code was in response to these developments to set out standards to holistically strengthen and promote the integrity and effective functioning of the wholesale foreign exchange (FX) market in Nigeria. It will facilitate better functioning of the market, further reinforcing Nigeria’s flexible exchange rate regime.
“The FX Code is expected to promote a robust, fair, liquid, open, and appropriately transparent market in which a diverse set of market participants, supported by resilient infrastructure, can confidently and effectively transact at competitive prices that reflect available market information in a manner that conforms to acceptable global behavioural standards and best practices.
“The FX Code applies to Market Participants. These are Authorised Dealers licenced by the CBN under the CBN Act 2007, and the Bank and Other Financial Institutions Act (BOFIA) 2020 and other participants that engage in the wholesale foreign exchange business in Nigeria as part of their licensed business.”
It added that the FX Code is structured around six leading principles, namely ethics, governance, execution, information sharing, risk management and compliance, and confirmation and settlement processes.
“In addition, some principles were incorporated in the Nigerian FX Code to promote efficiency in the Nigeria FX market.
“The FX Code requires Market Participants to ensure that illegal financial transfers are avoided, and appropriate money laundering policies put in place to protect the integrity of the domestic markets and the global financial framework as a whole.
“In the context of the FX Code, the term “Market Participant” is generally used to refer to banks, personnel, and other approved institutions. In some cases, it will be clear that a principle is by its nature more relevant to only one or the other. For example, certain principles deal primarily with business or bank-level policies and procedures rather than individual behaviours.
“The terms “banks” and “personnel” are occasionally used where principles focus on good practice by banks with regard to personnel in their capacity as such, and vice versa.”
