The Central Bank of Nigeria has issued fresh guidelines for interbank foreign exchange trading via the Electronic Foreign Exchange Matching System, mandating a minimum trade value of $100,000.

The directive, dated 25 November 2024 and signed by Dr Omolara Duke, CBN’s Director of the Financial Markets Department, is part of efforts to ensure transparency, efficiency, and compliance within Nigeria’s FX market.

According to a new set of guidelines released by the CBN on Tuesday, the EFEMS is designed to streamline interbank FX trading, reduce counterparty risks, and ensure adherence to CBN regulations.

The apex bank has designated Bloomberg’s BMatch as the official order-matching platform for interbank transactions, with trading hours set between 9:00 am and 4:00 pm West Africa Time on business days.

One notable provision in the guidelines is the enforcement of a $100,000 minimum tradable amount, with incremental clip sizes of $50,000.

The EFEMS is also limited to spot FX transactions involving the Nigerian naira and the United States dollar.

The CBN, however, retains the discretion to introduce other currency pairs when deemed 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.

“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.”

Participation in the EFEMS is limited to authorised dealer banks licensed by the CBN, while other institutions wishing to join the platform must first obtain prior approval.

Participants are also required to execute agreements with the CBN-approved platform provider, maintain accurate profiles, and operate within prescribed credit and settlement limits.

Withdrawal from the platform must be preceded by a 30-day notice, along with the resolution of any outstanding obligations.

Also, trades conducted via the platform will remain anonymous until matched. Counterparty details will only be revealed once transactions are concluded, in line with settlement protocols.

Transactions exceeding set limits or conducted outside EFEMS parameters must be reported promptly and logged onto the FX blotter within 10 minutes.

The CBN emphasised that it will closely monitor all transactions on EFEMS to ensure market integrity and transparency.

Participants are required to submit daily reports detailing trade volumes, settlement statuses, and counterparties.

The central bank also reserves the right to publish aggregated or disaggregated trade data for market analysis, subject to confidentiality agreements.

Any violations of the EFEMS guidelines or related regulations will attract strict penalties, including the suspension or revocation of access rights.

The CBN further stated that it will periodically review the platform’s operations to ensure efficiency and compliance with its directives.

In a separate document on Tuesday, the CBN announced that the Bloomberg BMatch system will officially go live as the EFEMS for foreign exchange trading on December 2, 2024.

The CBN outlined that all authorised dealers and banks in the interbank FX market are required to deploy the Bloomberg BMatch system for their trading activities.

The system aims to ensure uniformity and seamless trading among market participants while enabling the CBN to effectively monitor market performance and data management.

The central bank urged banks to liaise with Bloomberg representatives to expedite the onboarding process and address any technical or operational issues promptly.

Experts have called on the Central Bank of Nigeria (CBN) to halt its consistent interest rate hikes, citing the adverse effects on small businesses and household finances. The call follows the apex bank’s decision to increase the Monetary Policy Rate (MPR) by 25 basis points, raising it from 27.25% to 27.50%.

The decision, announced by CBN Governor Yemi Cardoso after the Monetary Policy Committee (MPC) meeting in Abuja, was aimed at tackling rising inflation. The MPC unanimously agreed to the hike, emphasizing its necessity to curb inflationary pressures.

Governor Cardoso also highlighted concerns over inflation driven by surging food and energy costs, stating that price stability remains a top priority. “The full deregulation of the downstream petroleum sector is expected to stabilize price levels in the medium term,” he added.

Financial analysts expressed mixed reactions to the move. Professor Uche Uwaleke, Nigeria’s first Professor of Capital Market, suggested the marginal increase could indicate a pause in aggressive rate hikes by early next year. “A halt is necessary to alleviate the rising cost of funds and improve credit access for small businesses,” Uwaleke explained.

On the other hand, Olatunde Amolegbe, Managing Director of Arthur Steven Asset Management, acknowledged the hike as expected but warned it could further strain businesses and households. “Higher financing costs will be passed to consumers, escalating prices of goods and services,” he noted.

David Adonri, Managing Director of Highcap Securities Limited, underscored the importance of monetary policy in managing inflation but stressed its limitations without complementary fiscal measures. He attributed rising inflation to expansionary fiscal policies, insecurity, and currency depreciation.

Despite the CBN’s measures, inflation remains stubbornly high, exacerbating economic instability. Analysts linked poor Q3 2024 GDP performance in agriculture and manufacturing to rising interest and exchange rates.

Adonri emphasized that unchecked inflation would harm both consumers and producers, urging fiscal and monetary authorities to collaborate on structural reforms. “Interest rate hikes offer short-term benefits, such as exchange rate stability, but addressing structural issues is vital for long-term growth,” he said.

Cardoso expressed satisfaction with the banking sector’s stability amid external and internal challenges. He noted that key financial indicators, including the Capital Adequacy Ratio (CAR) and Non-Performing Loan (NPL) ratio, remained robust.

Experts and the CBN alike stressed the need for coordination between monetary and fiscal policies to address the structural causes of inflation and stabilize the economy. Governor Cardoso reaffirmed the importance of collaboration, especially in managing exchange rate pressures and inflation fueled by high demand and energy costs.

The Central Bank of Nigeria, CBN has increased interest rate to 27%.

This followed the meeting of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN). The monetary policy rate measures the benchmark interest rate.

The CBN governor Yemi Cardoso announced this in Abuja on Tuesday during the last MPC meeting of the year at the apex bank’s headquarters.

Cardoso said the MPC voted unanimously to raise the MPR by 25 basis points from 27.25% to 27.50%; and retain the Cash Reserve Ratio (CRR) at 50% for Deposit Money Banks and 16% for Merchant Banks.

The CBN chief also said the MPC retained the Liquidity Ratio (LR) at 30% and Asymmetric Corridor at +500/-100 basis points around the MPR.