CBN Sets August 1 Date For Banks To Use FMDQ Platform | Independent Newspapers Limited
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CBN Sets August 1 Date For Banks To Use FMDQ Platform

Posted: Jul 13, 2016 at 3:19 am   /   by   /   comments (0)

 

Bamidele Ogunwusi

Lagos

With effect from August 1st 2016, all forex-related trades by banks and corporate institutions in the forex market must be executed through the FMDQ-advised FX trading, auction and surveillance systems, the Central Bank of Nigeria (CBN) has said. The apex bank gave this directive in a circular posted on its website last Friday.

According to the circular, which was signed by the Director, Financial Markets Department, Dr. Alvan Ikoku, “all Authorised Dealers (i.e. Banks) are to execute all FX trades among themselves and with their clients (i.e. Corporate Institutions) through the FMDQ-advised FX Systems.

The deployment of the FMDQ-advised FX Systems will only be to those corporate that have been screened and pre-approved by FMDQ in line with its on-boarding eligibility criteria.

” Stressing that banks and corporate institutions operating in the foreign exchange market should comply strictly with the directive, the apex bank said it was part of efforts to engender, transparency and professionalism in the Nigerian foreign exchange market.”

Financial analysts, however, believe that the directive is an attempt by the regulator to close possible loop holes for abuse that it had observed since trading under the new forex system, which commenced on June 20th.

It will be recalled that in unveiling guidelines for the new forex policy, the CBN had said that authorised dealers will buy and sell FX among themselves on a two-way quote basis, trade with the CBN, and will also offer one-way quotes (bid or offer) on requests-to-quote to other authorised participants such as corporate and end-users.

It further stated that trading will take place through the FMDQ Thomson Reuters Foreign Exchange Trading System.

According to the guidelines, the CBN will perform its role as a market intervention participant, in line with global standards, while market forces are left to determine demand and supply dynamics of the market.

Commenting on the new trading system, Vice President & Divisional Head, Marketing & Business Development, FMDQ, Tumi Sekoni, said: “The inter-bank 2-WQ FX market will, through the concerted efforts of the Over-The-Counter (OTC) Exchange and all market participants, serve to endear an even greater investor confidence in the Nigerian FX market”.

“With its potential to drive transparency and liquidity, FMDQ, through the System, is adequately equipped to provide a complete and consolidated marketplace for FX trading and reporting, offering market participants and regulators a robust and flexible set of tools to support the full trade workflow.”