Revised Interbank Foreign Exchange Market (IFEM) Framework

Bank otZambia
OFFICE OF THE DEPUTY GOVERNOR - OPERATIONS
December 16,2013
CB Circular No.: 2112013
To All Commercial Banks
REVISED INTERBANK FOREIGN EXCHANGE MARKET (IFEM) FRAMEWORK As part of the continued efforts to develop and strengthen the foreign exchange market, the Bank of Zambia has, in consultation with ACI Zambia and the Bankers Association of Zambia (BAZ), revised the Interbank Foreign Exchange Market (IFEM) Framework. The major changes to the IFEM Framework are as follows:

1. The Marketable amount for a two-way quote has been revised to US$1.0 million
   from the current range of US$O.5 million - US$l.O million. The Marketable amount of US$l.O million is consistent with the growth of the market and it is more reasonable to attach a quote (price) to a specific amount rather than a range.
2. The Bid/Ask Spread has been reduced from KO.02 to KO.OI in order to enhance
   market liquidity and efficiency.
3. New personnel in Front (dealing) and Back Office shall within six (6) months of
   engagement acquire the ACI qualification.
4. In respect of foreign exchange transactions, late settlement of US dollar and
   Kwacha shall attract a penalty charge of LIBOR + 3% and Bank of Zambia Overnight Lending rate, respectively. The revised Interbank Foreign Exchange Market Framework, herewith attached, and all the above changes shall take effect immediately. The Bank of Zambia wishes to reiterate the need for commercial banks to comply with the Foreign Exchange Market Code of Conduct in order to facilitate smooth and efficient functioning of the market. Bwl Iya K.E. Ng'andu (Dr) DEPUTY GOVERNOR - OPERATIONS Bank Square, Cairo Road P.O. Box 30080, Lusaka, Zambia Tel: 260-211-226844,228888 Fax:260-211-237070 E-mail:dgo@boz.zm.Web: http://www.boz.zm