The central bank of Nigeria (CBN) has introduced a unique foreign exchange window for investors and manufacturers to ensure timely execution and settlement for eligible transactions.
Transactions eligible to access the window include invisible transactions excluding international airlines ticket sales remittances; bills for collection and any other trade related payment obligations (at the instance of the customer).
The CBN in a statement signed by its Director of Financial Markets Dept., Mr. Alan Ikoku, stated that it shall participate in the supply of Forex to the Window in order to promote liquidity and professional market conduct.
Others approved to supply forex to the window include portfolio investors, exporters, authorised dealers and other parties with foreign currency to exchange to Naira.
“Due to the slow progress made by corporates in on-boarding the FMDQ Thompson Reuters FX Trading & Auction Systems, participants at this Window shall trade via telephone until appreciable progress is made with the FX Trading Systems On-boarding process,” the CBN said.
The regulator advised authorised dealers to promote market transparency by encouraging their corporate clients to on-board to ensure the activities of the Window are operated on the FX Trading Systems.
“Participants are advised to ensure that all trade conversations are recorded and auditable. Consequently, to provide price discovery to the market, FMDQ, OTC Securities Exchange (FMDQ) shall be charged with polling buying and selling rates and other relevant information from the major participants in the market to provide participants with the requisite price discovery and the CBN with the indicative market depth until the market migrates to the FX Trading Systems,” the CBN added.
The CBN further directed the FMDQ to publish market rates and any other relevant information twice daily (9:00 am and 4:00 pm) on its website.
The CBN added that market participants in the FX market shall have opportunities to hedge their foreign exchange exposures.
“Authorised dealers shall provide the market with required FX hedges including forwards, swaps, futures or options,” the bank said.
The CBN further assured that it shall continue to bolster liquidity in the derivatives market with the Naira-settled OTC FX Futures which shall, going forward settle on NAFEX.