BY Busola Aro
The Central Bank of Nigeria (CBN) has warned foreign exchange (FX) authorised dealers, as well as their customers, to desist from giving inaccurate and misleading information about their transactions.
CBN disclosed this in a circular signed by Aliyu Ashiru, the acting director of the financial markets department, on Monday.
On June 14, 2023, CBN announced the unification of all segments of the forex exchange (FX) market.
In doing so, the financial regulator re-introduced the “willing buyer, willing seller” model at the investors and exporters (I&E) window, adding that operations in this window would be guided by the extant circular on the establishment of the window, dated 21 April 2017 and referenced FM/DIR/CIR/GEN/08/007.
It added that all eligible transactions are permitted to access foreign exchange at this window.
However, Ashiru said investigations revealed under-reporting of transaction rates and the nefarious practice of “second cheques” in foreign exchange and fixed-income deals.
He said these activities will no longer be tolerated as those caught making deliberate attempts to create price distortions by reporting false transaction details will face sanctions.
“All Authorised Dealers are reminded that the Central Bank of Nigeria (CBN) has permitted financial markets transactions to be conducted on a ‘willing buyer willing seller’ basis, and therefore expects prices to be quoted and displayed in a transparent manner,” CBN said.
“The attention of the CBN has been drawn to the practice of Authorised Dealers (and their customers) in reporting inaccurate and misleading information on transactions concluded in the financial market.
“Ongoing investigations have revealed instances of under-reporting of transaction rates and the practice of ‘second cheques” on foreign exchange and fixed income transactions.
“This behaviour is not compliant with the ethical standards associated with a sound financial market, and deliberate attempts to create price distortions by reporting false transaction details amounts to market manipulation which will not be tolerated and will henceforth face sanctions.
“The CBN remains committed to a transparent and well-functioning financial market and enjoins all stakeholders to carry out their legitimate business in compliance with the rules and guidelines as published by the CBN.”
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