Is Forex trading legal in Nigeria? An expert overview
Overview
With the increase in forex trading over the past few years, especially in Africa and with Nigeria being one of two large markets in Africa, alongside South Africa, there may be numerous questions regarding the legitimacy of forex trading in Nigeria.
South Africa and Nigeria have the highest concentration of traders in all of Africa and for this reason, it is imperative to affirm the legitimacy thereof so that traders can rest assure that their trading activities are legal.
There are numerous large participants on both the Nigerian and forex market, these include the following:
• The Central Bank of Nigeria
• Commercial banks
• Authorized buyers
• Authorized dealers
• Oil companies, and numerous others.
Legality should be at the forefront as there are numerous operations where currencies are being exchanged without the proper procedures or regulations.
In addition, the Nigerian forex market also shows substantial levels of volatility which is as result of the dependence on oil that Nigeria experience, leading to a major earner of foreign exchange.
As result of this volatility, the Nigerian government, through the Central Bank of Nigeria, has attempted to implement effective measures to address regulation of the sector more effectively.
This allows the Central Bank of Nigeria to formulate relevant policies as well as procedures, promoting the control of forex transaction in Nigeria and minimizing and eliminating fraudulent, criminal transactions.
Nigeria’s forex trading is predominantly governed by the following laws and policies:
• The Exchange Control Act of 1962.
• The Central Bank of Nigeria Act.
• Banks and other Financial Institutions Act of 2007.
• The Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, and
• The Money Laundering (Prohibition) Act, amidst numerous others.
The verdict on forex trading in Nigeria
Under the various acts and regulations forex trading is allowed. In addition, through these laws as well as regulations, the Central bank of Nigeria is empowered to periodically regulate any transactions which are carried out in foreign countries.
There are strict protocols in place, but forex trading is legal, as long as it is done through a regulated broker. Offline forex trading may be conducted by banks and any other authorized dealers regulated by the Central Bank of Nigeria, or CNB.
You might like: Best ECN Forex Brokers in Africa ( Updated 2021 )
In turn, the CNB allows banks as well as other approved bodies to engage in forex trading and offer it to Nigerian forex traders.
As far as online forex trading is concerned, it is still a fairly new concept and for this reason there are no specific rules or regulations in place in this division yet.
However, the Association of Online Forex Trading Agent in Nigeria is recognized by the government in working alongside the CNB and other regulatory entities tasked with developing a working framework for trade.
Through this, Nigerian Forex traders can rest assured that they abide by the laws and regulations which are in place and governing forex trading.
In addition, Nigerian traders are urged to ensure that they only make use of regulated brokers to ensure that they have the necessary protection from regulatory entities.
Ready to Start Trading?
Click here to open a FREE Trading Account for a Licensed Nigerian Broker
