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The Central Bank of Nigeria (CBN) has unveiled a new Electronic Foreign Exchange Matching System (EFEMS). This will enhance transparency and governance in the Nigerian Foreign Exchange Market (NFEM). The system is set to go live on December 1, 2024, following a two-week test phase in November.
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In a circular signed by Dr. Omolara Duke, Director of the Financial Market Department at the CBN, the apex bank explained that the EFEMS is designed to promote a more transparent and market-driven exchange rate accessible to the public.
“The introduction of EFEMS will enhance governance, transparency, and facilitate a market-driven exchange rate accessible to all,” said the CBN.
Key Benefits of EFEMS
The new system aims to reduce market distortions. It will also curb speculative activities by providing real-time data on prices and buy/sell orders. Additionally, it will strengthen the CBN’s ability to oversee the foreign exchange market. This in a way will ensure more effective regulation.
By leveraging this digital platform, the CBN seeks to address long-standing challenges in the Nigerian foreign exchange market. The apex regulator is also seeking to provide a more efficient and transparent environment for both buyers and sellers.
Real-Time Data and Market Rules
The CBN will publish real-time data from the EFEMS platform, allowing for greater insight into FX transactions. In collaboration with the Financial Markets Dealers Association (FMDA), the CBN will also release new operating rules for the system to guide market participants.
The Nigerian FX Code and revised Market Operating Guidelines will provide additional clarity, ensuring that authorized dealers adhere to the required standards.
Preparation for December Go-Live
Authorized dealers are expected to comply with all existing guidelines governing the Nigerian foreign exchange market. The CBN has mandated that dealers complete all documentation, training, and system integrations ahead of the EFEMS’ official launch in December 2024.
This initiative by the CBN is part of broader efforts to stabilize Nigeria’s foreign exchange market and promote a transparent, market-driven exchange rate that benefits all stakeholders.
