{"id":596864,"date":"2019-03-07T01:08:26","date_gmt":"2019-03-07T01:08:26","guid":{"rendered":"
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The Bank of Ghana (BoG) has started the implementation of some drastic measures to streamline trading of dollars and other major foreign currencies in the country.\u00a0<\/p>\n

These new set of regulations could see traders prosecuted and lose license for breaches.<\/p>\n

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Why these regulations?<\/b><\/p>\n

The new set of regulations or call it market conduct, are primarily aimed at helping better regulate the conduct of forex trading in the country as well bring some integrity and ensure that trading is done in a transparent manner. It is seen as part of ongoing reforms to also bring forex trading in the country to best international practices to best international practices.\u00a0<\/p>\n

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However, some people have argued that it is part of measures that the Bank of Ghana is looking at to help deal with the perennial sharp depreciation of the Ghana cedi.\u00a0<\/p>\n

There are some who have argued that the market needs\u00a0tight regulations to deal with some \u201cexcesses\u201d.<\/p>\n

BoG also highlights these major points as reasons for the new conduct:<\/b><\/p>\n

The new regulations according to the BoG is to\u00a0clearly regulate the conduct of interbank foreign exchange business in the Ghanaian financial market.<\/p>\n

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It is also to establish standards of practice expected of market participants to help ensure an efficient and effective FX market.
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The new regulations will also help develop and deepen the foreign exchange market in Ghana.<\/p>\n

According to the Bank of Ghana, all market participants are required to conduct their activities ethically, transparently and professionally to ensure fairness and integrity of the foreign exchange market.<\/p>\n

They are also expected to act in an honest and fair manner when dealing with clients and other participants.\u00a0<\/p>\n

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The Central Bank noted that market players are also required to act with integrity in all their dealings or activities.<\/p>\n

The requirement for traders under this new conducts<\/b><\/p>\n

Licensed Foreign Exchange Dealer (LFXD) as licensed by the Bank of Ghana and Foreign Exchange Brokers FX are required to have recording devices in their offices.\u00a0<\/p>\n

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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.<\/p>\n

In general, tapes should be kept for a minimum period of 6 years (First two years shall be an inactive state) in compliance with Electronic Transactions Act, 2008(Act 772) section 8(2).<\/p>\n

Points and Position Parking<\/b><\/p>\n

Under no circumstances shall LFXDs or Brokers engage in artificial transactions for the purpose of concealing positions or transferring profits and losses.<\/p>\n

Such activities sometimes referred to as \u201cpoints\u201d or \u201cposition\u201d parking, not only undermine the integrity of the markets but may also attract legal liability for the individuals and\/ or firms concerned<\/p>\n

Price\/Rate Quotations<\/b><\/p>\n

The Bank of Ghana in conduct regulation adds that all market participants, whether acting as Principal or Broker, have a duty to make clear whether the prices they are quoting are binding or merely indicative.<\/p>\n

Prices quoted by Brokers should be taken to be binding in marketable amounts unless otherwise qualified.<\/p>\n

The BoG also seek to sanction firms or individuals who breach sections of the new regulations.<\/p>\n

Penalties for Forex traders who breach these regulations<\/b>
Based on the conduct documents these are the penalties for breaching relevant sections of this regulation<\/p>\n

i. \u00a0 \u00a0Suspension of LX FD, dealing officer, FX Broker and the publication of same in the newspapers
ii. Revocation of FX dealing license, and the publication of same in the newspapers
iii. Legal prosecution of fraudulent cases. Where appropriate, Bank of Ghana will refer fraudulent cases to the law enforcement agents and the Attorney General for prosecution
iv. Exclusion from trading with the Bank of Ghana
v. Name and shame of recalcitrant market participants.<\/p>\n

The Central Bank plans coming up with Ghana Cedi Reference rate which would also guide exchange rates determination.<\/p>\n

BoG\u2019s main objective of introducing these new regulations was aimed at sanitizing the industry.<\/p>\n

However, some people are of the view that it would help stabilize the cedi in the medium term, which has been under serious pressure over the past month.\u00a0<\/p>\n

These regulations are also seen as part of forex reforms that the IMF also pushed for, as part of those targets that must be met before completing the program.
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