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2012-09-28 | FMD/FED/CIR/GEN/01/082/10

Revised Guidelines for the Operation of the Foreign Exchange Market: Wholesale Dutch Auction System-Spot (WDAS-SPT)

In 2011, the Central Bank of Nigeria (CBN) continued to adopt the Wholesale Dutch Auction System (WDAS-SPT) in the foreign exchange market, with guidelines as follows. Authorised Dealers submit bids via Reuters Dealing 3000 Xtra system between 9:00 AM and 10:30 AM on Mondays and Wednesdays for a minimum of $500,000 per auction. CBN reserves the right to determine the amount sold to an Authorised Dealer and announces auction results by 12:00 PM the same day. Settlement occurs on a spot basis (T+2), with funds purchased used exclusively for eligible transactions and not transferred within the inter-bank foreign exchange market. Bids should reflect immediate client demand, and Authorised Dealers are expected to maintain compliance with relevant laws and CBN guidelines or face appropriate sanctions.

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Nigeria

Central Bank of Nigeria

December 29, 2010 Our Ref: FMD/FED/CIR/GEN/01/082/10 E-mail: fmd@cenbank.org TO ALL AUTHORISED DEALERS REVISED GUIDELINES FOR THE OPERATION OF THE FOREIGN EXCHANGE MARKET: WHOLESALE DUTCH AUCTION SYSTEM-SPOT (WDAS-SPT) Consistent with the objectives of enhancing efficiency in the Foreign Exchange Market through market determination of the Naira exchange rate, the Central Bank of Nigeria will continue to adopt the Wholesale Dutch Auction System (WDAS-SPT) in the year 2011.

Consequently, the guidelines for the operating the system are as follows:

  1. The Central Bank of Nigeria (CBN) shall continue to intervene in the Foreign Exchange Market through the wholesale Dutch Auction System- Spot (WDAS-SPT).

  2. The CBN shall announce on Mondays and Wednesdays the amount on offer for each auction by 8.30am through the Reuters Dealing 3000 Xtra system. Copies of the announcement may be obtained from the CBN website www.cbn.gov.ng or Financial Markets Department of the Central Bank of Nigeria at the following location: Abuja: 8th floor, Wing C CBN Head Office Central Business District Abuja.

Fax: 09-46237841 Tel: 09-46237871, 46237870, 46237838, 46237836 3. Authorised Dealers shall submit their bids on Mondays and Wednesdays via Reuters Dealing 3000 Xtra system to the Abuja dealing line.

  1. The Authorised Dealers shall submit their bids as per the attached format duly signed by two authorized signatories for any particular auction session between 9.00am and 10.30am of the day of auction. The hard copies of bid request should be sent to CBN Abuja.

  2. Authorised Dealers shall submit bids for not more than one tranche per auction.

  3. The minimum bid amount by an Authorized Dealer shall be $500,000.00 (five hundred thousand dollars) and the currencies of transaction shall be the Nigerian Naira (NGN) and United States dollar (USD).

  4. The CBN reserves the right to determine the amount that will be sold to an Authorised Dealer.

  5. The CBN shall announce the result of each Auction by 12.00 noon on the day of auction. This announcement shall include both the marginal and weighted average rates of all the successful bids at the auction.

Authorised Dealers shall be debited at their bid rate including 1% commission. A copy of result may be obtained from the office mentioned in (2) above.

  1. Settlement shall be on spot basis i.e T+2. Authorised Dealers shall ensure that they provide adequate (NGN) Naira cover in their current accounts with the CBN on the settlement date. These accounts shall be debited with the (NGN) Naira equivalent of the USD purchased, at the bid rate as the auction is a multiple-price auction. The CBN shall effect delivery of US Dollars purchased by each Authorised Dealer same day.

  2. The delivery of the purchased USD shall be into the nominated correspondent bank account used for WDAS transactions by the Authorised Dealer.

11.Funds purchased from CBN at the Auction shall be used for eligible transactions only. Such fund shall not be transferable in the Inter-bank foreign exchange market including sales to the BDCs, Hotels, etc.

12.Authorised Dealers shall continue to bid at the WDAS-SPT on their own accounts, however, it is the expectation of the CBN that whilst Authorised Dealers have been granted the daily Net Open Position (NOP) limits, WDAS-SPT bids shall be reflective of the immediate demand for the clients of the Authorised Dealer.

that will be communicated on weekly basis.

ays. The funds shill be pirchaed the CRA Forex Dealers at a rate unuling purchased from the WDAS-PFT within five (5) working www.biren.com/restration/servers on of the Crielsed besinoritive.com Manhattan Bank, New York.

Dris strengthe CBA, to the CBN SPECIAL FEM ACCOUNT with Chilod the banks' Current Accounts at the CBN. The banks shall deliver US CAR of the deliver the Mish cover for US Doler bought from the banks to and of the particip such as of companies, stc at their offer rates. The a de market and mont e pons do and and and and and be Dest and rate until the next auction.

at and the provins and the characted the the USD/NGN0.50.

ther tanking halls. The spread between these rates shall not exceed in vlauousiqanos sets than display the bid offer rates consistously in

17.

relevant laws and CBN quidelines.

atta attract appropriate sanctions as spet out in the provisions of Contravention of any of the Foreign Exchange Market regulations SANCTIONS:

FINANCIAL MARKETS DEARTMENT Ag. DIRECTOR, O.F. OWOLABI

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