Fidelity, FNB assure of swift resolution to FX suspension

Fidelity Bank and First National Bank (FNB) have assured the general public of their commitment to resolving the underlying issues and minimising any disruptions to their customers’ financial services, in response to the recent suspension of their Foreign Exchange (FX) operations by the Bank of Ghana (BoG).

This comes on the back of central bank enforcement of compliance in the forex market, imposing fines and suspending licences for breaches of relevant guidelines.

The duo were penalised with a combined 1,000 penalty points each for violating sections 3.4, 3.5 and 3.9 of the Ghana Interbank Forex Market Conduct rules, and have had their respective forex licences suspended from June 29, 2023 to July 28, 2023.

Fidelity Bank, in a statement, reiterated that the regulator’s action does not in any way affect the bank’s normal banking operations, adding: “While we address the reporting concerns raised by our regulator, we have in the interim reached agreements with our partner banks to aid in seamless completion of foreign exchange transactions on behalf of Fidelity Bank.

“We apologise for any inconvenience this announcement may have caused, and we reassure all our valued customers that we are actively engaging the Bank of Ghana to resolve the issue as soon as possible. All branches, agent points and digital platforms continue to provide our customers with the full range of financial services as usual. As a bank we strive to maintain the highest levels of operational compliance across all our business activities, and we are fully committed to engaging the Bank of Ghana to resolve this situation,” the statement read.

FNB, also in a statement, noted that due to an ongoing engagement with the regulator it is unable to initiate and complete forex trading for the next 30 days, stating that: “This temporary hold will allow us to complete our engagement process with the Bank of Ghana (BoG) and make the necessary adjustments to our forex trading business in line with the regulator’s policies.

“To minimise any possible disruptions, we have made alternative arrangements with partner-banks to initiate and complete forex trade deals for and on behalf of First National Bank Ghana and its clients, should the need arise,” it added.

“As we cooperate with the BoG throughout this process, be assured that your business relationship and all other banking relationships with First National Bank will not be impacted,” FNB said.

The regulator yesterday announced the punitive measures in a statement. The watchdog said: “The Bank of Ghana has fined Fidelity Bank Ghana Limited and First National Bank Ghana Limited a combined 1,000 penalty points each for breaching sections 3.4, 3.5 and 3.9 of the Ghana Interbank Forex Market Conduct rules. In addition, the Bank has suspended the respective forex licences of the above-mentioned banks from 29th June 2023 to 28th July 2023”.

Breaches

These infractions underscore the banks’ disregard for crucial regulations that govern the forex market. Section 3.4 of the guidelines specifically address Indicative Quotes, which mandate Licenced Foreign Exchange Dealers (LFXDs) operating in the interbank forex market (excluding the BoG) to regularly update their indicative quotes for buying and selling US dollars on the Reuters and Bloomberg information systems.

These updates must occur at intervals of no more than 30 minutes. This requirement is vital for maintaining transparency and enabling market participants to make well-informed decisions.

“LFXDs are required to update indicative quotes for buying and selling US dollars at regular intervals, on the Reuters and Bloomberg information systems. 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),” it reads.

Furthermore, section 3.5 – which concerns Trade Reporting on Platforms, mandates all interbank FX trades to be booked on the Reuters platform and confirmed within five minutes after conclusion of the trade. Additionally, these trades must be reported in the daily FX report submitted to the apex bank. This requirement ensures accurate record-keeping and enhances market oversight.

“All interbank FX trades must be booked on the Reuters platform and appropriately confirmed within five minutes after the trade is concluded. These trades must also be reported in the daily FX report submitted to the Bank of Ghana,” the section says.

Lastly, section 3.9 – which concerns the Fixing of the Official Exchange Rate, outlines the procedure for calculating the Ghana cedi reference rate in relation to the US dollar. The regulator is responsible for publishing this reference rate on its website daily at 16:30 hours Greenwich Mean Time (GMT), excluding holidays.

The rate is calculated using the weighted average exchange rate of all eligible US dollar transactions reported to the regulator before the cut-off time of 15:30 hours GMT. The Bid and Offer reference rates are determined by applying a bid/ask spread of plus or minus 0.05 percent around the weighted average exchange rate. Additionally, the reference rate is also published on Reuters and Bloomberg by 16:30 hours GMT.

This move serves as a stern reminder to all market participants, including banks, forex bureaus, forex brokers and money transfer operators (MTOs) to strictly comply with applicable forex market regulations and guidelines, the regulator said.

Market analysts who weighed in on this development agreed that the move will foster greater compliance and discipline among market participants, safeguarding the interests of both investors and the broader economy.

The central bank’s cautionary message, they said, serves as a reminder for all forex market players to strictly adhere to applicable regulations and guidelines, promoting a fair and transparent trading environment that will further deepen the nation’s developing financial ecosystem.