Forex traders under the aegis of the Association of Bureau De Change Operators of Nigeria (ABCON) say the permission of BDCs to purchase foreign exchange directly from authorized dealers by the Central Bank of Nigeria (CBN) is not automatic.
It stated that participation is subject to meeting the new capitalization guidelines and requirements of BDCs introduced by the CBN in May 2024.
This was made known by the ABCON President, Aminu Gwadebe, while reacting to CBN’s revised guidelines for the Nigerian Foreign Exchange Market (NFEM), during a chat with Nairametrics.
Gwadebe revealed that the new policy does not permit the current eligible BDC operators to purchase forex from the interbank market.
What the ABCON President is saying
Gwadebe said, ‘’We received the news with mixed reactions while it is intended to increase the liquidity in the retail end of the forex market after meeting up the new recapitalization requirements of either N500 million or N2 billion in the May guidelines, however, it does not specifically permit the current eligible BDC licenses to purchase foreign exchange from the interbank market.
‘’It is tied and subject to meeting the new capitalization guidelines/requirements of BDCs introduced by CBN In May 2024. It also addresses the pertinent question people are asking on the sources of funds in the new BDCs guidelines by most applicants on the policies.
‘’It is not automatic and subject to meeting the new capitalization requirements set in the new BDC’s guidelines released in May 2024.’’
Gratitude to the CBN for the clarification
Going further, the ABCON boss expressed the association’s gratitude to the management of the apex bank for yielding to its request for further clarification on the role of the BDCs in the new forex guidelines upon meeting the new recapitalization requirements.
He said, ‘’It is another spice to encourage BDCs to meet the new capitalization requirements. Finally, we thank the CBN Management for yielding to our request for further clarification on BDCs’ role in the new guidelines upon meeting up with new recapitalization requirements. It will raise the hopes of members and new entrants.
‘’It is a good development as the CBN has cleared the issue of the emerging new recapitalized BDCs in participating in the new NFEMS platform.’’
What you should know
The CBN had a few days ago revised its guidelines, permitting licensed Bureaux de Change (BDCs) to purchase foreign exchange directly from Authorized Dealers.
- This is part of the central bank’s move aimed at streamlining Nigeria’s foreign exchange (FX) market enabling the naira to reflect its true value.
- This decision, outlined in the CBN circular titled “Revised Guidelines for the Nigeria Foreign Exchange Market (NFEM)” issued on November 29, 2024, marks a pivotal shift in the regulatory landscape for BDCs.
- For the first time in years, BDCs are now allowed to buy FX directly from Authorized Dealers, subject to a monthly cap set by the CBN.
The circular from the CBN partly reads, ‘’Bureaux de Change (BDCs) operators licensed under the revised guidelines (ref FPRD/DIR/PUB/CIR/002/010 issued on May 22, 2024) are permitted to buy foreign exchange from Authorised Dealers to meet their customer needs, subject to the aggregate monthly cap stipulated by the CBN.
“All foreign exchange transactions consummated with Authorised Dealers, Bureaux de Change operators, and International Money Transfer Operators (IMTOs) are strictly subject to the terms of their respective licenses.
“All market participants are expected to adhere to the highest code of ethics and professional conduct in all their dealings in the foreign exchange market in line with the Nigerian FX Code.”