CBN does a turnaround, allows all banks to be primary forex dealers

The Central Bank of Nigeria (CBN) is believed to have thrown the door open for all banks in the country to be Foreign Exchange Primary Dealers (FXPD).

After the CBN unveiled the new forex policy guidelines on Wednesday, it was discovered that some of the conditions for banks was to have two of the following – a minimum of N200 billion in shareholders’ funds, N400 billion worth of forex assets and 40% liquidity ratio.

However, a revised set of guidelines sighted by TheCable on Friday, said “the Central Bank of Nigeria has decided to allow any Authorised Dealer who is interested in acting as a Foreign Exchange Primary Dealer (FXPD) to apply even if the said Authorised Dealer did not meet the quantitative criteria stated in the CBN Guidelines for Primary Dealership in Foreign Exchange Products released on June 15, 2016.”

“The Central Bank of Nigeria shall evaluate all the first set of registered FXPDs by December 31, 2016. The evaluation shall cover both quantitative and qualitative Foreign Currency Balance Sheet, adequacy of Pre-Settlement Risk (PSR) lines for other Authorised Dealers, etc). Please note also that the performance and market conduct of the FXPDs in their dealings with the CBN shall be a major factor in the said evaluation.”

“For the avoidance of doubt, FXPDs are to provide two-way quotes (bid and offer) to the CBN and CBN reserves the right to deal on any of the quotes”

“The immediate applicable bid-ask spreads shall be agreed between the CBN and FXPDs and these shall be reviewed periodically. The CBN reserves the right to adjust the standard sizes stated above. All other provisions of the Guidelines remain valid.”

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