The Central Bank of Nigeria (CBN) has announced the launch of the Electronic Foreign Exchange Matching System (EFEMS), a new initiative designed to transform the country’s foreign exchange market, Okay.ng reports.
The EFEMS, scheduled to become operational in the Nigerian Foreign Exchange Market by 1 December 2024, will undergo a two-week test run in November.
The system aims to reshape how foreign exchange transactions are conducted in the interbank market by promoting transparency and facilitating a market-driven exchange rate accessible to the public.
In a circular issued by Omolara O. Duke, Director of the Financial Markets Department at the CBN, the bank mandated that all authorized dealers will be required to conduct FX transactions using the new platform, ensuring that transactions are immediately reflected in the market.
“The Central Bank of Nigeria hereby announces the introduction of the Electronic Foreign Exchange Matching System for foreign exchange transactions in the Nigerian Foreign Exchange Market to be implemented no later than 1 December 2024. There will be a two-week test run in November 2024,” the circular read.
The CBN hopes the EFEMS will address issues related to currency instability and speculative trading, which have contributed to market distortions.
By leveraging the new system, the bank aims to minimize speculative activities and provide real-time data on exchange rates, including buy/sell orders.
The circular further noted, “The new system is expected to enhance governance and transparency and facilitate a market-driven exchange rate that will be accessible to the public. This development is expected to reduce speculative activities, eliminate market distortions, and give the CBN improved oversight capabilities to effectively regulate the market.”
The EFEMS will also offer real-time price data, and in collaboration with the Financial Markets Dealers Association, the CBN will publish the rules guiding the platform.
The Nigerian FX Code and revised Market Operating Guidelines will provide additional clarity for market participants.
As the CBN prepares to roll out EFEMS, authorized dealers are required to comply with existing regulations, complete necessary documentation, and ensure system integration and training are completed before the system goes live in December.
