ABCON unveils plan to get forex dealership
The Association of Bureau De Change Operators of Nigeria (ABCON) has officially declared intention to pursue the Forex Primary Dealership (FXPD) licences.The renewed strategy to remain in business by the Bureau De Change operators, is coming on the heels of the release of requirements to participate, which individual BDCs cannot meet.
The capital base for participating institutions released by the Central Bank of Nigeria (CBN, required N600 billion capital base, of which N200 billion will represent shareholders fund, while N400 billion stands as evidence of foreign assets.
ABCON President, Alhaji Aminu Gwadabe, who disclosed the group’s position yesterday, said that as a major and critical stakeholder in the forex business, it will be against standard business practice to exclude bureaux de change (BDC) operators from the workings of the new CBN forex policy.
He said the licence would enable BDCs access Diaspora remittances estimated at $21 billion yearly and by extension, deepen dollar liquidity in the system.
ABCON therefore, said it is also asking the CBN to grant it self-regulatory status that would enable it monitor and supervise its members’ compliance with the extant regulatory requirement on the new forex regime.
He said there are about 3,000 BDCs under the ABCON umbrella, and that granting one out of the about 10 FXPD licences to the group, would be in the interest of the financial system and economy.
Gwadabe, however, faulted the stringent conditions for qualification as an FXPD saying it will establish a new cartel in the banking industry and place only a few banks in advantage positions.
The ABCON boss said the role of the primary dealers should be to boost offshore dollar inflow into the economy rather than buying the limited dollars from the CBN.
“I see the FXPD policy as formalising the operations of the black market operations unless more operators are licenced to run it. The policy has already created cartel and monopoly to select few in the financial market,” he said.
The broad framework and guidelines of the Flexible Exchange Rate Inter-bank Market was released by the CBN on June 15 during which it restored the automatic adjustment mechanism of the exchange rate with the re-introduction of a flexible inter-bank exchange rate market.
The CBN said the workings of this market will be consistent with its objectives of enhancing efficiency and facilitating a liquid and transparent Foreign Exchange Market.
According to the CBN, the market shall operate as a single market structure through the inter-bank/autonomous window while the exchange rate would be purely market-driven using the Thomson-Reuters Order Matching System as well as the Conversational Dealing Book.
The CBN would also participate in the market through periodic interventions to either buy or sell forex as the need arises. It said the FXPD would improve the dynamics of the market, and would be registered by the CBN to deal directly with the bank for large trade sizes on a two-way quotes basis.