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 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.”
Other requirements of FXPDs, according to the guidelines include that they must resell a minimum of 70 per cent of any uptake from the CBN in the inter-bank market on the day of purchase and have a maximum limit of +0.5per cent/-10per cent of their shareholders’ funds unimpaired by losses as foreign currency trading position limits.
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.”