The Central Bank of Nigeria (CBN) has established a minimum transaction value of $100,000 for interbank foreign exchange trading through the Electronic Foreign Exchange Matching System (EFEMS).
This directive, dated November 25, 2024, was signed by Dr. Omolara Duke, CBN’s Director of the Financial Markets Department.
Dr. Duke explained that this move is part of the CBN’s efforts to enhance transparency, efficiency, and regulatory compliance within Nigeria’s foreign exchange market.
The EFEMS platform is designed to optimize interbank FX trading, minimize counterparty risks, and ensure alignment with CBN regulations.
Additionally, CBN has appointed Bloomberg’s BMatch as the official order-matching platform for interbank transactions. Trading will take place on business days from 9:00 am to 4:00 pm West Africa Time.
The $100,000 minimum trade value will be accompanied by increments of $50,000.
The EFEMS will initially support spot FX transactions involving the Nigerian naira and the US dollar, with the CBN retaining the discretion to introduce additional currency pairs when necessary.
The guidelines document read, “All trades consummated on EFEMS are binding unless canceled by mutual agreement of both parties with written approval from the CBN.
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“The minimum tradable amount is US$100,000.00, with incremental clip sizes of US$50,000.00.
“Participants must set credit and settlement limits for other counterparties in the system. Transactions exceeding these limits will not be executed.
“Participants must have adequate credit and settlement limits set for the CBN as its counterparty bank.
“Participants are required to comply with the Nigerian Foreign Exchange Code and other CBN regulations.”
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Participation in the EFEMS is restricted to authorised dealer banks licensed by the CBN. Other institutions seeking to join must first obtain prior approval from the CBN.
These institutions are also required to enter into agreements with the CBN-approved platform provider, maintain accurate profiles, and operate within specified credit and settlement limits.
A 30-day notice is required for withdrawal from the platform, and all outstanding obligations must be settled before departure.
Trades conducted on the platform will remain anonymous until matched, with counterparty details disclosed only after the transaction is completed, in accordance with settlement protocols.
Transactions that exceed the prescribed limits or fall outside EFEMS parameters must be promptly reported and logged in the FX blotter within 10 minutes.
The CBN has stressed that it will actively monitor all transactions on EFEMS to ensure market integrity and transparency.
Participants are obligated to submit daily reports on trade volumes, settlement statuses, and counterparties.
Additionally, the CBN reserves the right to publish aggregated or disaggregated trade data for market analysis, in line with confidentiality agreements.
Any breach of EFEMS rules or related regulations will result in severe penalties, including suspension or revocation of access rights.
The CBN also noted that it will periodically assess the platform’s operations to ensure it remains efficient and compliant with its directives.
The CBN announced that the Bloomberg BMatch system will officially launch as the EFEMS for foreign exchange trading on December 2, 2024.
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