The Central Bank of Nigeria (CBN) has directed participants in the foreign exchange (FX) market to submit compliance reports regarding their adherence to the Nigeria FX Code by January 31, 2025. This initiative is part of the CBN’s ongoing efforts to strengthen ethical practices, governance, and transparency in the market.

The Nigeria FX Code, which came into effect on December 2, 2024, outlines principles of good practice designed to ensure a robust, fair, and transparent foreign exchange market. The code applies to authorised dealers licensed under the CBN Act of 2007, the Bank and Other Financial Institutions Act of 2020 (BOFIA), and other entities involved in wholesale FX business in Nigeria.

In line with the new directive, market participants are required to conduct a self-assessment of their compliance with the FX Code and submit a detailed report to the CBN by the deadline. The reports must be endorsed by the board of directors of the institutions, and include an implementation plan to address any gaps in compliance. Additionally, participants must provide extracts of board meeting minutes to demonstrate proper oversight and accountability.

The CBN’s official document, released on Monday, outlined the following requirements for market participants:

• Self-assessment and submission of a compliance report by January 31, 2025.

• Detailed compliance implementation plan, approved and signed by the institution’s board, along with extracts from board meetings.

• Quarterly compliance reports will be required after the initial deadline, due within 14 days following the end of each calendar quarter. The first set of these reports will be due by March 31, 2025.

The CBN has emphasized that enforcement mechanisms will be in place to ensure adherence to the FX Code, including monetary penalties as provided for under the CBN Act of 2007 and the BOFIA Act of 2020. These measures aim to address non-compliance and maintain integrity in the FX market.

The Nigeria FX Code is modeled on the Global FX Code, aligning with international best practices while also addressing the unique dynamics of the Nigerian FX market. Key areas covered by the code include ethics, governance, execution, information sharing, risk management, and settlement processes, all designed to create a more transparent and accountable FX market in Nigeria.