In a move aimed at boosting liquidity and improving access to foreign exchange at the retail end of the market, the Central Bank of Nigeria (CBN) has approved the participation of licensed Bureau De Change (BDC) operators in the Nigerian Foreign Exchange Market (NFEM).
Under the new framework, BDCs are permitted to source foreign exchange directly from the NFEM through authorised dealer banks at prevailing market rates. However, weekly foreign exchange purchases by each BDC have been capped at $150,000, and all transactions must strictly comply with existing operational guidelines.
The directive, contained in a circular issued by the CBN and signed by the Director of the Trade and Exchange Department, Dr. Musa Nakorji, is intended to deepen market efficiency, enhance transparency, and ensure that legitimate end-user demand for foreign exchange is adequately met.
According to the circular, all BDCs duly licensed by the apex bank may access foreign exchange through any authorised dealer bank of their choice. The policy is expected to widen participation in the FX market and promote broader distribution of foreign exchange across the economy.
To mitigate risks and prevent abuse, the CBN has imposed stringent compliance and risk-management requirements. Authorised dealer banks are mandated to conduct comprehensive Know-Your-Customer (KYC) and due-diligence checks on BDCs before selling foreign exchange to them.
In addition, licensed BDCs are required to submit timely and accurate electronic transaction returns in line with existing regulatory standards, a measure designed to strengthen transparency and accountability within the market.
The circular also prohibits BDCs from holding foreign exchange positions sourced from the NFEM. Any unutilised FX must be sold back into the market within 24 hours of purchase.
Further restrictions apply to settlement practices. All FX transactions must be conducted through designated settlement accounts with licensed financial institutions. Third-party transactions are expressly prohibited, while cash settlement is limited to no more than 25 per cent of the total transaction value.
Overall, the new directive underscores the CBN’s broader strategy to strike a balance between expanding access to foreign exchange and maintaining robust regulatory oversight, with the dual objectives of improving market liquidity and safeguarding the integrity of Nigeria’s financial system.