Accordance with Ghana Interbank Forex Market Conduct rules leads to temporary suspension
The Bank of Ghana (BoG) has recently reinstated the forex licenses of Fidelity Bank and First National Bank after temporarily suspending them for violating specific sections of the Ghana Interbank Forex Market Conduct rules. The Central Bank took this action as a measure to ensure compliance within the financial sector.
As per the penalties imposed, both Fidelity Bank and First National Bank were fined 1000 penalty points each and were prohibited from participating in forex trading for a duration of 30 days, starting from June 29 and ending on July 28, 2023.
Ease the Sanctions and permit the Banks to resume Forex Trading
However, the Bank of Ghana has decided to ease the sanctions and permit the banks to resume forex trading before the originally scheduled end of the suspension. Governor of the Bank of Ghana, Dr. Ernest Addison, informed the media that the licenses of the two banks were restored two weeks ago, effectively reducing their punishment by half. Consequently, the banks have been back in the forex market for some time now.
The specific breaches that led to the suspension were related to sections 3.4, 3.5, and 3.9 of the Ghana Interbank Forex Conduct rules.
Section 3.4 pertains to indicative quotes, which require banks to update indicative quotes for buying and selling US dollars at regular intervals on the Reuters and Bloomberg information systems. These quotes are expected to be updated at intervals not exceeding 30 minutes, displaying the minimum traded lots at which a market-maker is willing to buy and sell.
On the other hand, section 3.5 involves trade reporting platforms. The rule mandates that all interbank FX trades must be booked on the Reuters platform and confirmed appropriately within five minutes after the conclusion of the trade. Additionally, these trades must be reported in the daily FX report submitted to the Bank of Ghana.
The banks also failed to adhere to section 3.9 concerning the fixing of the official exchange rate. This section states that the Bank of Ghana must publish the Ghana Cedi reference rate with respect to the US dollar on its website daily by 16:30 hours GMT (except on holidays). The reference rate is computed using the weighted average exchange rate of all eligible US dollar transactions reported to the Bank of Ghana by the cut-off time of 15:30 hours GMT. The Bid and Offer reference rates are then calculated by taking a +/- 0.05% bid/ask spread around the weighted average exchange rate. The reference rate is also published on Reuters and Bloomberg by 16.30 hours GMT.
The restoration of the forex licenses allows both Fidelity Bank and First National Bank to resume their regular forex trading activities, signaling a positive step toward regulatory compliance and financial stability in the country’s banking sector.