The Bank of Ghana has released new guidelines on forex trading in Ghana. According to the Bank of Ghana, the new Ghana Interbank Forex Market Conduct, which takes effect today, 25th February, 2019 is meant to: more clearly regulate the conduct of interbank foreign exchange business in the Ghanaian financial market; to establish standards of practice expected of market participants to help ensure an efficient and effective FX market and to help develop and deepen the foreign exchange market in Ghana
The guidelines have become necessary as the Ghanaian currency continues to perform abysmally against major trading currencies on the global market. Last week, Bloomberg reported that the cedi had weakened 8.6 percent in 2019 alone: “…the most among more than 140 currencies tracked by Bloomberg”.
Source: Bloomberg
Bloomberg further stated: “The cedi declined as much as 0.5 percent on Friday to the weakest level since Bloomberg started keeping the records in 1994, before reversing losses to trade 2.2 percent stronger at 5.3772 per dollar by 4:38 p.m. in the capital, Accra.”
Industry players who spoke to CediDollar.com believe that the disingenuous activities of some players in the forex market have contributed hugely to the weak performance of the currency, hence the necessary enforcement of new guidelines by the central bank to rein in the rogue professionals.
Provisions in the guideline warn that forex market Dealers and Brokers “…are strictly prohibited from making frivolous quotes; these are quotes which they have no intention of honouring and are designed merely to mislead market participants.”
The guidelines further indicate that “Dealers and Brokers should not engage in practices by which they may realize immediate gain (or avoid loss) but may compromise their clients, employers or their own reputation.”
Further, the guideline introduces telephone recordings of all transactions undertaken by FX Brokers. “LFXDs and Brokers should inform their counterparties and clients that conversations will be recorded. LFXDs and Brokers should have internal policies that ensure compliance with appropriate data and tape recording retention requirements. In general, tapes should be kept for a minimum period of 6 years (First two years shall be in active state) in compliance with Electronic Transactions Act, 2008(Act 772) section 8(2),” as stated in article 4.7 of the guidelines.
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