Fidelity Bank and First National Bank Ghana Limited have been given a one-month suspension of their respective foreign exchange (forex) licenses, and fined a combined penalty of 1000 penalty points each (equivalent to GHC12,000) for breaching Ghana’s forex regulations.
Per the public notice issued by the Bank of Ghana (BoG) yesterday, the financial entities breached the Indicative Quotes, Trade Reporting on Platforms, and Fixing of the Official Exchange Rate rules of forex trade.
According to BoG, the suspension would be in effect from yesterday June 29, 2023, until Friday, July 28, 2023.
“Bank of Ghana has fined Fidelity Bank Ghana Limited and First National Bank Ghana Limited a combined 1000 penalty points each for breaching sections 3.4, 3.5, and 3.9 of the Ghana Interbank Forex Market Conduct rules,” it said.
It, therefore, cautioned “forex market players including banks, forex bureaus, forex brokers, and money transfer operators (MTOs) to adhere strictly to the applicable forex market regulations and guidelines.”
The regulation
The Ghana Interbank Forex Market Conduct rules were issued under Section 92(1) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), the Foreign Exchange Act, 2006 (Act 723), and accompanying operational guidelines.
It was made effective February 25, 2019, to regulate the conduct of interbank foreign exchange business in the Ghanaian financial market, establish standards of practice expected of market participants to help ensure an efficient and effective FX market as well as help develop and deepen the foreign exchange market in Ghana.
Section 3.4 of the Conduct states that “Licensed Foreign Exchange Dealers (LFXDs) are required to update indicative quotes for buying and selling US dollars at regular intervals, on the Reuters and Bloomberg information systems.”
It points out that the “indicative quotes shall be updated at intervals of no more than 30 minutes. (This will show the price at which a market-maker is prepared to buy and sell at the minimum traded lots).”
Also, Section 3.5 which is the Trade Reporting on Platforms, states that “All interbank Foreign Exchange (FX) trades must be booked on the Reuters platform and appropriately confirmed within five (5) minutes after the trade is concluded. These trades must also be reported in the daily FX report submitted to the Bank of Ghana.”
Fixing of the Official Exchange Rate, Section 3.9 of the Conduct indicates that “The Bank of Ghana shall publish the Ghana Cedi reference rate with respect to the US dollar on the Bank of Ghana website by 16:30 hours GMT daily except on holidays.”
It notes that “the reference rate shall be computed using the weighted average exchange rate of all eligible US dollar transactions that are reported to the Bank of Ghana by the cut-off time of 15:30 hours GMT. The Bid and Offer reference rates are calculated by taking a +/- 0.05% bid/ask spread around the weighted average exchange rate.”
Penalties
Beyond the penalties aforementioned, other sanctions include the issuance of warning letters to the dealing officer and their LFXDs or FX Broker, suspension of LXFD, dealing officer, FX Broker and the publication of same in the newspapers, revocation of FX dealing license, and the publication of same in the newspapers.
Others are the legal prosecution of fraudulent cases. Where appropriate, BoG will refer fraudulent cases to law enforcement agents and the Attorney General for prosecution, exclusion from trading with the Bank of Ghana as well as the naming and shaming of recalcitrant market participants.
