The Central Bank of Nigeria (CBN) has directed authorised dealers to encourage corporate clients to join the FMDQ system for forex trading.
The bank gave the directive in a circular issued by CBN Director, Financial Markets Department, Dr Alvan Ikoku. It said that the directive took immediate effect. The CBN advised the dealers to allow the corporate clients to on-board the FMDQ foreign exchange trading system immediately, to avoid sanctions. It said that the development would help foster speedy migration of the activities of Investors and Exporters foreign exchange window into the FX FMDQ trading system. The bank said it would ensure that the objective of deepening the market was achieved. According to the apex bank, the directive is a further step in its effort to develop the foreign exchange market.
“The CBN, in its efforts to further develop the Nigerian FX market, continues to embark on initiatives that serve to improve the FX market structure.”
The bank added that it would continue to embark on initiatives that serve to improve the market structure. It said that dealers at the inter-bank market might decrease their excess foreign currency trading positions to counterparts without seeking prior approval from the CBN. The bank warned that funds purchased by a dealer from another in the inter-bank market should not be held in position overnight by the buying dealer or sold to another. The apex bank ordered that dealers should not exceed their respective Foreign Currency Trading Position Limit [FCTML] without the CBN’s approval, while its compliance would be monitored.
It said that all inter-bank trades such as spot, forwards, futures, options and swaps that had impact on an dealer’s FCTPL, were expected to comply with rate reasonability standards.
By Olawunmi Ashafa