The Central Bank of Nigeria (CBN) has introduced an electronic foreign exchange matching system (EFEMS) to curb speculation in the FX market.
In a circular on Thursday, Omolara Duke, CBN’s director of financial markets department, stated that the system will be implemented by December 1, with a 2-week test run in November.
The CBN explained that authorised dealers will carry out all foreign exchange transactions in the interbank FX market using the EFEMS, where transactions will be immediately reflected.
The new system aims to improve governance, transparency, and foster a market-driven exchange rate accessible to the public.
According to the CBN, this development is expected to curb speculative activities, eliminate market distortions, and give the apex bank enhanced oversight to regulate the market effectively.
Additionally, the CBN will publish real-time prices and buy/sell order data from the system.
In collaboration with the Financial Markets Dealers Association (FMDA), the CBN will release rules for the EFEMS.
The Nigerian FX Code and revised Market Operating Guidelines for the Nigerian Foreign Exchange Market will guide market participants.
The CBN also directed authorised dealers to comply with all existing guidelines and regulations governing the FX market and ensure that necessary documentation, training, and systems integrations are completed before the system’s launch.
