The Central Bank of Nigeria (CBN) has introduced updated guidelines that allow licensed Bureaux de Change (BDCs) to directly acquire foreign exchange from Authorized Dealers.
This change is part of broader efforts to improve Nigeria’s foreign exchange (FX) market and align the naira’s value more closely with market realities.
Outlined in a CBN circular titled “Revised Guidelines for the Nigeria Foreign Exchange Market (NFEM)” and dated November 29, 2024, the new regulations represent a significant shift in policy governing the operations of BDCs.
The revised guidelines address multiple aspects of the FX market, including pricing mechanisms, interbank trading, compliance requirements, and reporting standards. Notably, the inclusion of BDCs in the official FX market marks a major development. For the first time in years, BDCs are now authorized to purchase FX directly from Authorized Dealers, though their transactions are subject to a monthly cap set by the CBN.
“Bureaux de Change (BDCs) operators licensed under the revised guidelines (ref FPRD/DIR/PUB/CIR/002/010 issued on May 22, 2024) are permitted to buy foreign exchange from Authorised Dealers to meet their customer needs, subject to the aggregate monthly cap stipulated by the CBN,” the circular states.
Enhanced Monitoring and Compliance
All FX transactions involving BDCs must strictly adhere to licensing terms and high standards of ethical conduct, as outlined by the Nigerian FX Code. To improve transparency, the new framework mandates that BDCs submit daily transaction reports to the CBN using real-time reporting systems. Similarly, Authorized Dealers, such as commercial and merchant banks, are required to report transactions within 10 minutes through an API-enabled system.
Centralized Pricing Framework
FX pricing under the revised rules will be centralized via the Electronic Foreign Exchange Matching System (EFEMS). The CBN will publish daily rates to ensure all market participants, including BDCs, have access to standardized and reliable data. This system aims to reduce market distortions and improve access to FX for small businesses and individual customers.
Implications for BDC Operators
While the changes offer BDCs expanded access to FX, they also impose stricter regulatory oversight. Operators must adopt digital tools to ensure seamless and timely reporting. By adhering to these guidelines, BDCs are expected to better serve retail customers, foster market transparency, and contribute to a more efficient FX ecosystem.
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