CBN Sets New Compliance Standards for BDCs To Improve FX Market Transparency
- The CBN has issued new regulatory guidance directing BDC operators on how they must handle foreign exchange purchased through the NFEM
- The apex bank warned that BDCs holding onto unutilised FX beyond the approved utilisation period risk forfeiture and suspension of market access
- The apex bank also launched a centralised FX BDC Purchase Tracker to monitor compliance and improve transparency in the retail FX market
Legit.ng journalist Dave Ibemere has over a decade of experience in business journalism, with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
The Central Bank of Nigeria (CBN) has ordered Bureau De Change (BDC) operators to return any foreign exchange purchased through the Nigerian Foreign Exchange Market (NFEM) that remains unused within 24 hours of the expiry of the approved utilisation period.
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The order is contained in the apex bank's Regulatory Guidance on the Purchase of Foreign Exchange by BDCs through Authorised Dealer Banks in the NFEM, which sets out a stricter compliance framework for how operators may access and handle foreign currency obtained from the official market.
The CBN stated:
"BDCs are not permitted to retain in their possession any foreign exchange purchased from the NFEM that remains unutilised. All unutilised balances shall be sold back to the NFEM market within twenty-four (24) hours of the expiry of the utilisation period."
Operators who fail to meet this obligation face regulatory sanctions, including forfeiture of the outstanding foreign exchange balance and suspension of access to the NFEM, according to Vanguard.
The guidance also requires BDCs to disclose any unused foreign exchange from the preceding week when submitting new purchase requests. At the same time, authorised dealer banks must account for such carry-over balances when computing weekly allocations.
CBN Bans Third-Party FX Transactions
Beyond the 24-hour rule, the CBN has barred BDCs from directing foreign exchange purchases into any account other than their registered settlement accounts.
Transfers to third-party accounts will be treated as regulatory violations and must be reported without delay.
Participation in the framework is restricted to BDCs holding valid CBN licences.
Operators whose licences have been suspended, are subject to existing sanctions, or whose operating conditions have been curtailed by the bank will be ineligible to access the NFEM until those restrictions are formally lifted.
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The regulator also moved against anti-competitive practices by authorised dealer banks, prohibiting exclusivity arrangements, referral fees, and any other conditions that could restrict a BDC's right to freely choose its counterparty bank.
CBN Launches FX Purchase Tracker
Earlier, Legit.ng reported that CBN has sharpened its oversight of the retail foreign exchange market with the launch of a centralised FX BDC Purchase Tracker (FXBT).
All eligible BDCs are required to register on the platform and submit real-time or same-day data on foreign exchange purchases.
The CBN said the tracker is designed to improve monitoring and strengthen transparency across the sector.
The bank stressed that violations of the circular or the accompanying regulatory guidance would attract appropriate sanctions as it works to maintain orderly conditions and sustain liquidity in Nigeria's foreign exchange market.
Source: Legit.ng
