In a bid to further enhance the efficacy and efficiency of the Nigerian Foreign Exchange Market, the Central Bank of Nigeria through the Director of Exchange Department issued a circular dated August 17 2023 titled “Operational Mechanisms for Bureau de Change in Nigeria”. These guidelines outline key changes that are aimed at streamlining and improving the Bureau de Change operation and it is a complete departure from the former policies enacted by the former CBN Governor Godwin Emefiele, who suspended forex sales to Bureau de Change (BDC) operators two years ago on grounds of sharp practices within the industry in addition to flouting stipulated regulations.
KEY PROVISIONS OF THE CIRCULAR BDC OPERATORS SHOULD TAKE NOTE OF
The Central Bank of Nigeria announced the new ways in which Bureau de Change is to operate, there are:
1. Restrictions on Forex Spreads: Under the new circular, the difference between a BDC operator’s sell (bid) price and buy (ask) price of a currency shall now be within the limit of -2.5% to +2.5 of the Nigerian Foreign Exchange market window weighted average rate of the previous day.
2. Statutory periodic reports by BDC operators: All BDC operators are now mandated to submit their daily, weekly, monthly, quarterly, and yearly reports on the recently upgraded Financial Institution Forex Rendition System (FIFX).
3. Sanctions for non-rendition of periodic returns: From the date of publication of the circular, all BDC operators who fail to render periodic returns as mandated, will face sanctions which may include withdrawal operator’s license. The requirement for rendering returns also applies to BDCs with no recorded transactions within a given period. Under such circumstances, the BDC in question will be required to render nil returns.
The release of the operational guidelines signals a re-entry for BDC operators into the Forex market as well as an attempt by the Federal Government to re-integrate BDC operators into the Forex market.
However, it is uncertain as to whether or not these new rules will ameliorate or aggravate the hardship caused by the Nigerian forex crises in recent times. But with the zeal displayed by the Government to combat this crisis, one can only hope for the best.
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