CBN Introduces EFEMS to Boost Transparency in Forex Market

Central Bank of Nigeria (CBN) has introduced an Electronic Foreign Exchange Matching System (EFEMS) for Foreign Exchange (FX) transactions within the Nigerian Foreign Exchange Market (NFEM).

According to the CBN, the new system will be operational in the Nigerian Foreign Exchange Market by 1 December 2024 after a two-week test run scheduled for November.

In a circular signed by Dr. Omolara Duke, director of the Financial Market Department at the CBN, the apex bank explained that EFEMS is designed to improve governance and transparency in the FX market.

It is also expected to promote a market-driven exchange rate that will be more accessible to the public.

According to the CBN, “the introduction of EFEMS will enhance governance, transparency, and facilitate a market-driven exchange rate accessible to all.”

The system is expected to curb speculative activities, reduce market distortions, and provide the CBN with improved oversight capabilities for regulating the market effectively.

The CBN said it will publish real-time data on prices and buy/sell orders from the EFEMS. Additionally, in collaboration with the Financial Markets Dealers Association (FMDA), the CBN will release the rules for operating the system.

It added that the Nigerian FX Code and revised Market Operating Guidelines will also offer guidance to market participants.

Also, authorized dealers are required to ensure full compliance with the existing guidelines governing the Nigerian foreign exchange market and must complete all necessary documentation, training, and system integrations ahead of the December go-live date.