The Central Bank of Nigeria (CBN) has announced the launch of the Electronic Foreign Exchange Matching System (EFEMS) for all foreign exchange (FX) transactions within the Nigerian Foreign Exchange Market (NFEM).
This is in a bid to enhance transparency, governance, and market-driven exchange rate operations.
The new system is set to be fully implemented by December 01, 2024, following a two-week test run scheduled for November.
The EFEMS will revolutionize the way foreign exchange transactions are conducted, as authorised dealers will be required to conduct all transactions electronically through the new system.
This move will allow transactions to be reflected in real-time, providing market participants and regulators with immediate access to FX transaction data.
Dr. Jake Omolara O. Duke, Director of the Financial Markets Department at the CBN, expressed optimism about the new platform’s benefits.
According to him, EFEMS will improve governance in the FX market, foster transparency, and help establish a market-driven exchange rate that is accessible to the public.
“This system will also reduce speculative activities, eliminate market distortions, and provide the Central Bank with enhanced oversight capabilities to regulate the market more effectively,” Duke stated.
The introduction of EFEMS will allow for the publication of real-time prices and buy/sell orders, enhancing price discovery and providing a clear view of market activity.
The CBN said it will collaborate with the Financial Markets Dealers Association (FMDA) to publish the rules guiding the use of EFEMS.
Additionally, the Nigerian FX Code and revised Market Operating Guidelines will provide further clarity to market participants.
In preparation for the launch, authorised dealers are expected to ensure full compliance with existing guidelines, complete necessary documentation, conduct training, and integrate the required systems.
The CBN urges all participants to be ready by the go-live date, stressing the importance of smooth adaptation to the new system for the effective functioning of the Nigerian foreign exchange market.
This strategic move comes as part of the CBN’s continuous efforts to modernize and stabilize the foreign exchange market, ensuring that it operates with maximum efficiency, integrity, and fairness.