CBN new rules on Forex trading, the secrets simplified

 

The Central Bank of Nigeria (CBN) on Wednesday, June 15, officially announced a new foreign exchange policy.
Read more: https://www.naij.com/861626-revealed-new-way-benefit-forex-nigerias-dying-economy.html

The Central Bank of Nigeria (CBN) on Wednesday, June 15, officially announced a new foreign exchange policy.

Godwin Emefiele, the CBN governor made the disclosure, and listed some implications of the new development. According to the CBN’s statement, the Nigerian currency has been floated, hence there will be a single market for acquisition of the foreign currency. For those who deal in Forex, Naij.com has taken out time to break down the new CBN policy, giving traders a clearer insight regarding how the trade will be run from now on, as to aid them make maximum profit.

Reason for the new guidelines

The new guidelines have been laid down by the CBN to improve the quality of operating Forex trade in Nigeria. By laying down the new guidelines, the CBN seeks to ensure smooth trade, making the system much more transparent. Below are the major takes from the CBN guidelines and how they affect the trade

Approval of dealers

To ensure that there is a standard level of operation is met, CBN will approve a Forex primary dealer, only after proper evaluation. The dealer must have a minimum of Shareholders Fund of about N200 billion. He or she must also have a minimum of N400 billion foreign currency assets. Experience and skill will also be used to evaluate the dealer, he or she must have a very strong sales team and a broad distribution network. A key component of the evaluation of dealers will be the management of risks and the plan of recovery in case of any eventualities.

For those looking to trade in Foresx in Nigeria as dealers, proper computerisation will be needed for adequate reporting and documentation of trade and settlement processes. In a world that has been taken over by technology, the Forex primary trader in Nigeria must have perfect communications equipment which includes voice logging devices for maintaining interface with other dealers, customers and the CBN. Those looking to be Forex primary dealers would have to submit letter expressing their interest to the CBN, stating that he or she will operate under the given standard.

Roles of a Forex primary dealer

As a Forex primary dealer, an active participation in the interventions of CBN as regards the trade in Nigeria. This is to say that the dealer is to take an active part in implementing certain rules that enhance Forex trading in the country, these policies would come from time to time in accordance with CBN’s review timeline. A readiness to facilitate price discovery and developing liquidity in market is part of the dealers role. Provision of market information and analysis helpful in the formulation and implementation of foreign exchange is also the duty of the Forex primary dealer. As a dealer, one if expected to resell a minimum of 70 percent of any uptake from the CBN in the inter-bank market on the day of purchase. It must be noted that all trading shall be done within the stipulated trading hours which is between 9am and 2pm daily. Any trades done outside of the trading hours have to be agreed bilaterally and recorded. A strict adherence to the FMDQ Thomson Reuters FX Trading Systems or any other Systems approved by the CBN is advised.

 

The Central Bank of Nigeria (CBN) on Wednesday, June 15, officially announced a new foreign exchange policy.
Read more: https://www.naij.com/861626-revealed-new-way-benefit-forex-nigerias-dying-economy.html