The Central Bank of Nigeria (CBN) has said that for any financial institution to be qualified for appointment as a Foreign Exchange Primary Dealer (FXPD) under its new forex policy, such a company must meet two of three key criteria as at May 31, 2016.
According to the guidelines, “for primary dealership in foreign exchange products,” posted on its website yesterday, the CBN said the three criteria include the financial institution having shareholders fund unimpaired by losses of at least 200 billion; having a minimum of N400 billion in total foreign currency assets and a minimum liquidity ratio of 40 per cent.
In addition, the apex bank said it would evaluate the FXPDs on criteria such as their forex trading capacity, their deployment of approved forex trading systems, adequate computerisation of their trading, reporting and settlement processes.
The CBN further stated that the FXPD registration will be valid for a period of one year, adding that “renewal is subject to meeting the necessary criteria as determined from the annual CBN FXPD Registration Evaluation exercise.”
However, the regulator said it will not designate as FXPD, “any Authorized Dealer that is, or recently (within the last year) has been subject to financial market-related litigation or regulatory action or investigation that the CBN determines material or otherwise relevant to the potential FXPD.”
In a related development, the CBN also yesterday released the revised guidelines on the new forex policy.
According to the regulator, the FXPDs will operate with other authorised dealers (non- FXPDs) in the inter-bank market, to deal with it on large trade sizes on a twoway quote basis.
The apex bank further stated: “Participants in the inter-bank FX market shall include authorised dealers, authorised buyers, oil companies, oil service companies, exporters, end-users and any other entity the CBN may designate from time to time.”
