Cardoso warns against unethical conduct in fx market

…as CBN, banks commit to global best practice, transparency

The Central Bank of Nigeria (CBN) and Deposit Money Banks on Tuesday signed the Nigeria foreign exchange code, signaling a firm commitment by market operators to uphold highest level of ethical standards and transparency.

The code, expected to drive in needed liquidity, is part of CBN’s ongoing reforms to sanitise the market, foster accountability, and ensure that the system aligns with international standards while addressing Nigeria’s peculiarities.

It includes 52 guiding principles, built on six core codes, including ethics, governance, execution, information sharing, risk management and compliance, as well as confirmation and settlement processes.

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Merits for Nigeria include market integrity, diverse market participation, confidence and effectiveness.

At the launch, Olayemi Cardoso, CBN said the core codes and priciples together, provide the foundation for a resilient and transparent market that inspires confidence among both domestic and international participants.

“The FX Code is a binding commitment to accountability and transparency—and we must all play our part.

“It is a firm signal that business-as-usual will no longer suffice'” Cardoso warned.

He further called it, a blueprint for the future, grounded in the hard lessons of the past.

For many years, Nigeria has had to deal with multiple exchange rates, which created privileges for a select few at the expense of most Nigerians, and severely undermined market integrity.

The $7bn of FX backlogs that have now taken CBN over 12 months to verify has led to the discovery of multiple unethical and even illegal practices. Cardoso disclosed that the CBN is about to conclude a forensic audit of the backlogs assuring that final settlements would be processed accordingly.

Also, an unprecedented ways-and-means-financing which has reportedly reached over N30trillion inflicted significant damage on Nigeria’s economy, contributing to inflation, currency depreciation, and eroded public confidence.

Cardoso said these practices must never return.

“FX Code is a firm rejection of such distortions and an equally firm commitment to a future defined by fairness, trust and marketdriven principles.

“Unethical behaviours and systemic abuses – whether by those with privileged access or by complicit participants – eroded public trust and harmed our economy.

Read also: How CBN’s new FX Code will enhance market liquidity, transparency

“We will not tolerate any attempts to revert to those practices. Any individual or institution that violates the FX Code will face swift and decisive sanctions,” Cardoso warned.

According to him, the code is not just a set of recommendations, but would be enforced using the CBN and BOFIA Acts.

He said while violations would be met with penalties and administrative actions, market participants must recognize that adherence to these principles is not just about compliance but restoring public trust in the financial system.

“Self-regulation and conduct are at the core of the changes in culture we expect to see at play in the industry, and I expect the principles to be applied across other business areas,” he told the bankers.

Just before the CBN authority, bank CEOs and their representatives took turns to sign the document, the governor urged all market participants to embrace the principles wholeheartedly.

“Leaders in this room – Board Chairs, Managing Directors, and Chief Compliance Officers – must lead from the front. Embedding these standards within your organizations is not optional.”

“The era of opaque practices is over. We will not hesitate to act against any institution or individual that undermines the integrity of our financial markets,” Cardoso reiterated.

Market operators, including bank executives have hailed the code as innovative and timely. It comes just one month after the Electronic Foreign Exchange Matching System (EFEMS) was launched. EFEMS has so far helped strengthen the naira, while driving stability in the fx market. Since its launch, the naira has appreciated significantly—from ₦1,663.90 on December 2, 2024, to ₦1,536.72 as at Monday.

Read also: Naira appreciates further after CBN releases FX Code

In his goodwill message, Oliver Alawuba, Group Managing Director, United Bank for Africa (UBA) said it demonstrates a collective resolve to build an fx market rooted in transparency, professionalism, and ethical conduct.

He said CBN’s ongoing reforms have been pivotal in stabilizing the FX market, restoring investor confidence, and ensuring a more sustainable and resilient financial system.

He emphasized that by embedding global best practices and fostering a culture of trust and equity, the code will enhance market efficiency, attract greater participation, and elevate Nigeria’s standing in the global financial landscape.

He said: “This launch is not just the unveiling of a framework – it is a call to action for all stakeholders to uphold the principles of fairness, ethical behaviour, and professionalism.

“The strength of any financial market lies in the integrity of its participants, and with the Nigeria FX Code, we now have a unified platform to reinforce this commitment.

“Together, we can ensure that this market becomes a beacon of excellence, one that inspires confidence both locally and globally.”