CBN Accuses Banks of Financial Market Manipulation

The Central Bank of Nigeria (CBN) has warned deposit money banks against some financial market manipulation moves it spotted during an ongoing investigation of the operation of the lender of last resort under Godwin Emefiele.

In a recent circular to authorised dealers, the apex bank said it remained committed to transparency and a well-functioning financial market. It also encourages market participants to carry out their legitimate businesses in compliance with rules and guidance following a decision to float the naira.

“All authorised dealers are reminded that the CBN has permitted financial transactions to be conducted under willing buyers and willing sellers basis, therefore expects prices to be quoted and displayed transparently”. 

The naira was devalued by more than 51% on Monday at the official market. The move came after the CBN warned banks against underreporting financial market transactions, highlighting the risks of misinformation, price distortions, and market manipulation, with sanctions for non-compliance.

This steep depreciation of the naira against the dollar is defying efforts by the Central Bank of Nigeria and the Federal Government to boost liquidity in the foreign exchange market.

CBN said its attention was drawn to previous practices by banks and another authorised dealer reporting inaccurate and misleading information on transactions conducted in the financial market.

It said in the circular that the ongoing investigation has revealed instances of underreporting of transaction rates and practices of second cheques on foreign exchange and fixed income markets. Selloffs Push Nigeria Treasury Bills Yield to 8.3%

…deliberate attempts to create price distortions by reporting false transaction details amount to market manipulations, CBN warned, saying the practice will face sanctions. #CBN Accuses Banks of Financial Market Manipulation