The Central Bank of Nigeria (CBN) has announced the upcoming launch of the Electronic Foreign Exchange Matching System (EFEMS) for Foreign Exchange (FX) transactions within the Nigerian Foreign Exchange Market (NFEM).
Scheduled for implementation on December 1, 2024, this new system was detailed in a circular released to authorized dealers.
The circular, signed by Dr. Omolara Duke, Director of the Financial Market Department at the CBN, states that EFEMS is intended to enhance governance and transparency in the FX market. It aims to promote a market-driven exchange rate that is more accessible to the public.
According to the CBN, “the introduction of EFEMS will enhance governance, transparency, and facilitate a market-driven exchange rate accessible to all.” The system will undergo a two-week test run in November 2024 prior to its official launch.
Once operational, all FX transactions in the interbank market will be conducted through EFEMS, with transactions updated in real-time. The system is expected to minimize speculative activities, reduce market distortions, and provide the CBN with enhanced oversight capabilities for effective market regulation.
The CBN plans to publish real-time data on prices and buy/sell orders from EFEMS. In partnership with the Financial Markets Dealers Association (FMDA), the CBN will also issue rules for operating the system. Additionally, the Nigerian FX Code and revised Market Operating Guidelines will guide market participants.
Authorized dealers must ensure full compliance with existing guidelines governing the Nigerian foreign exchange market and complete all necessary documentation, training, and system integrations before the December launch.
This initiative is expected to significantly transform the FX landscape in Nigeria, fostering a more transparent and efficient foreign exchange market.