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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