The Central Bank of Nigeria (CBN) has released the Nigeria Foreign Exchange Code (FX Code) to strengthen the country’s FX market.
The document which was released on Thursday is aimed at facilitating better functioning of the market and reinforcing a flexible exchange rate regime.
The CBN said, “The FX Code requires Market Participants to ensure that illegal financial transfers are avoided, and appropriate money laundering policies put in place to protect the integrity of the domestic markets and the global financial framework as a whole.”
CBN said Nigeria pursues a floating exchange rate regime, and the value of the naira is determined by the market forces according to the demand and supply of foreign exchange.
The apex bank said all market participants are required to submit to the CBN a detailed compliance implementation plan that is approved by its Board by December 31, 2024.
“The FX Code should be fully implemented, and each Market Participant be in full compliance by December 31, 2024,” the bank said.
Based on the document, the CBN banned operators from buying or selling a larger amount around the period rates are referenced for computation with the intent of manipulating the market price.
It banned dealers from, “Buying or selling a larger amount than the client’s interest within seconds of the fixing calculation window with the intent of inflating or deflating the price
against the client.
“Buying or selling an amount shortly before a fixing calculation window such that there is an intentionally negative impact on the market price and outcome to the client.
“Showing large interest in the market during the fixing calculation window with the intent of manipulating the fixing price against the client.
“Informing others of a specific client dealing at a fixing rate; and acting with other market participants to inflate or deflate a fixing rate against the interests of a client.”