In an effort aimed at strengthening the integrity of Nigeria’s foreign exchange market, the Central Bank of Nigeria (CBN) has announced the upcoming launch of an Electronic Foreign Exchange Matching System (EFEMS) expected to transform foreign exchange (FX) transactions within the Nigerian Foreign Exchange Market (NFEM).
The new system is set to go live on December 1, 2024, following a two-week test run in November.
In a circular signed by Dr. Omolara Duke, the Director of the Financial Market Department at the CBN, the central bank emphasized that the EFEMS is designed to enhance governance and transparency within the FX market. This initiative is expected to facilitate a more market-driven exchange rate that is accessible to the general public.
The CBN stated, “The introduction of EFEMS will enhance governance, transparency, and facilitate a market-driven exchange rate accessible to all.” The new system is anticipated to curb speculative trading, reduce market distortions, and improve the CBN’s oversight capabilities in effectively regulating the FX market.
As part of the implementation process, the CBN will provide real-time data on prices and buy/sell orders generated by the EFEMS. The central bank is also collaborating with the Financial Markets Dealers Association (FMDA) to publish the operational rules governing the system. Additionally, revised Market Operating Guidelines and the Nigerian FX Code will offer essential guidance to market participants.
Authorized dealers in the FX market are required to ensure full compliance with existing guidelines and to complete all necessary documentation, training, and system integrations before the system goes live in December.
This strategic move by the CBN aims to strengthen the integrity of Nigeria’s foreign exchange market, promote investor confidence, and enhance the overall efficiency of FX transactions in the country. As the rollout date approaches, stakeholders are keenly awaiting the changes that EFEMS will bring to the Nigerian financial landscape.
