The evolving landscape of the Nigerian foreign exchange market has prompted the Central Bank of Nigeria ("CBN") to take decisive steps to bolster its efficiency. In line with this objective, on the 17th of August 2023, the CBN issued a momentous circular, titled the Operational Mechanism for Bureau De Change ("BDC") Operations in Nigeria ("Circular"). This Circular was issued two years after BDC Operators ("BDCs") were precluded by the CBN from participating in the official foreign exchange market on the basis of the perception that some BDCs were creating arbitrage in the market and being used as "conduits for committing fraud"

Therefore, the Circular seeks to regulate the activities of BDCs across the country with the ultimate goal of achieving greater market stability and fostering transparency within the foreign exchange ecosystem. In this newsletter, we examine the two operational mechanisms stipulated in the Circular as well as their implications on the market.


  1. Spread Regulation: Acknowledging the significant impact of exchange rate volatility, the Circular seeks to regulate the spread on buying and selling of foreign currency by BDCs. Going forward, the permissible margin is set within a range of -2.5% to +2.5% of the Nigerian Foreign Exchange market window's weighted average rate of the previous day. This limitation aims to prevent excessive fluctuations in exchange rates and maintain a fair and balanced market for all participants.
  2. Mandatory Reporting: Recognizing the power of comprehensive data in effective oversight, the circular mandates BDC operators to submit periodic reports through the upgraded Financial Institution Forex Rendition System (FIFX). The scope of reports includes daily, weekly, monthly, quarterly, and yearly renditions, tailored to individual operator requirements. This mandatory reporting requirement seeks to foster accountability and transparency within the foreign exchange market and as such fortifies market integrity. Additionally, it enables the CBN to discern adherence to spread regulations and other FX-related directives.
  3. Non-Rendition Sanctions: To ensure compliance with the new reporting requirements, the circular highlights the consequences of non-rendition of returns. Operators who fail to submit the mandated reports within the stipulated time frame may face sanctions, including the potential withdrawal of their operating license. It's important to note that even in cases where no transactions have occurred during a specific reporting period, BDC operators are still required to submit nil returns.


The issuance of the Operational Mechanism for Bureau De Change Operations in Nigeria CBN has ignited a path towards greater market stability and transparency. With spread regulation paving the way for controlled exchange rate fluctuations and mandatory reporting elevating accountability to new heights, the Circular reshapes how BDC operators engage with the foreign exchange landscape. It is also important to note that whilst the CBN has in the past issued a number of Circulars to regulate the operations of BDCs, they have not always been effective. Perhaps, considering the deliberate efforts of the current government at stabilizing the foreign exchange market, the Circular will achieve the intended results.

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