The Central Bank of Nigeria (CBN) Governor Olayemi Cardoso announced that any violation of the newly launched Nigeria Foreign Exchange (FX) Code would attract severe penalties.
Speaking at the official launch of the FX Code in Abuja on Tuesday, Cardoso affirmed the Central Bank’s resolve to enforce ethical conduct and transparency in the foreign exchange market.
The FX Code, a landmark initiative by the CBN, establishes clear and enforceable standards for ethical behaviour, governance, and compliance in Nigeria’s foreign exchange market. It aims to eliminate the systemic abuses and unethical practices that have plagued the market in the past.
An enforceable framework backed by legislation
The FX Code is backed by the CBN Act of 2007 and the Banks and Other Financial Institutions Act (BOFIA) of 2020, which provide a robust legal framework for imposing sanctions on violators.
Cardoso stated that adherence to the principles outlined in the Code is non-negotiable.
“The FX Code marks a new era of compliance and accountability. It is not just a set of recommendations; this is an enforceable framework. Under CBN Act 2007 and BOFIA Act 2020, violations will be met with penalties and administrative actions.
“Market participants must recognize that adherence to these principles is not merely about compliance but about restoring public trust in our financial system,” he emphasized, adding that penalties for non-compliance would be swift and decisive.
The Governor called on Board Chairs, Managing Directors, and Chief Compliance Officers to take the lead in embedding the principles of the FX Code into their organizations.
He highlighted that the Code’s six core principles Ethics, Governance, Execution, Information Sharing, Risk Management and Compliance, and Confirmation and Settlement Processes—are designed to align with international best practices while addressing Nigeria’s unique challenges.
Reforms yielding results
Cardoso also pointed to the tangible results of recent reforms in the FX market, including the introduction of the Electronic Foreign Exchange Matching System (EFEMS) in December 2024. The EFEMS has improved transparency and efficiency, contributing to a significant appreciation of the naira from N1,663.90 in early December to N1,536.72 as of January 27, 2025. Nigeria’s external reserves have also grown by 12.74%, reaching $40.68 billion by the end of 2024.
The Governor reaffirmed the CBN’s commitment to ensuring a transparent and efficient FX market that supports Nigeria’s economic stability.
“The FX Code is a binding commitment to accountability and transparency—and we must all play our part,” he said, expressing gratitude to stakeholders, including the Financial Markets Dealers Association and the Global Foreign Exchange Committee, for their collaboration in developing the Code.
A collective pledge to integrity
The launch of the FX Code represents a significant milestone in Nigeria’s journey toward restoring trust and integrity in its financial markets. Cardoso urged all stakeholders to view the Code as a collective pledge to ethical conduct and transparency, warning that the CBN would not tolerate any attempt to undermine the reforms.
With the FX Code now in force, the CBN has signalled its intent to hold financial institutions accountable, ensuring that the principles of fairness, trust, and market-driven practices remain central to Nigeria’s foreign exchange operations.
What you should know
Nairametrics earlier reported that the Central Bank of Nigeria (CBN) directed participants in the foreign exchange (FX) market to submit a compliance report on adherence to the Nigeria FX Code by January 31, 2025.
- This directive is part of the apex bank’s efforts to strengthen ethical practices, governance, and transparency in the FX market.
- The Nigeria FX Code, effective from December 2, 2024, outlines principles of good practice to ensure a robust, fair, and transparent FX market. It applies to authorised dealers licensed under the CBN Act 2007, the Bank and Other Financial Institutions Act 2020, and other institutions engaged in wholesale FX business.