- Wednesday, 25 February 2009
- By Administrator
FX SALES TO CUSTOMERS UNDER RETAIL DUTCH AUCTION SYSTEM
The CBN Foreign Exchange Auction takes place on Monday and Wednesday each week and the results will be released by CBN on same day. The following procedure shall apply for processing FX bids.
a) All bid requests by customers must include the mandatory information as specified by the CBN as follows:
· Applicant’s Name
· RC Number(corporate)/Passport Number(Individual)
· Applicants Address
· Form M/A Number
· Bid Rate
· Amount (To be specified in US Dollars)
b) FX bids requests may be submitted to Trade Services by customers through the Relationship Managers (RM)/ HOPs who should ensure that signatures on the requests have been verified according to mandate and ensure that customer’s account is funded adequately for the transaction.
The bid requests should reach Trade Services on or before 4.00 p.m. a day preceding the auction day (i.e. Friday for the Monday auction and Tuesday for the Wednesday auction) to allow for documentation review by Trade services. Where a bid is processed without complete documentation based on approved deferral, the relationship manager shall ensure submission of such outstanding documents within 5 business days otherwise the FX will be repurchased at a loss to the customer.
c) On receipt of the FX bids, Trade will check for completeness of information as specified by the CBN. Any exceptions are communicated immediately to the customers through the Relationship Managers.
d) FX bids for Bills for collections will be further reviewed by Trade to ensure that
- The tenor is not in excess of 180 days after bill of lading date
- Interest is computed accurately by the customer using the bill of exchange tenor, invoice (CCVO) amount at a maximum rate of LIBOR + 1%.
e) Trade will collate the FX bids using the Excel Spreadsheet provided by the CBN and on completion of the collation of the FX bids and subsequent checks/review, Trade Services will hand a soft and hard copy (as specified by CBN) of the FX bid list to Treasury by 9.00a.m on the day of the auction for the purpose of funding the bank’s CBN account and subsequent presentation to CBN.
f) Trade Services will debit customer account with the credit to a sundry account pending receipt of the Bid result.
DR: Customer’s Account (Naira Equivalent of FX request +
1% for CBN + 1% for Sterling Bank’s spread)
CR: Designated Sundry Account.
f (!) On release of FX bid results, Trade will swap the naira equivalent in the sundry A/C for customers with successful bids and credit the customer’s ledger 4018 account in the Currency of the transaction.
DR: Designated Sundry Account
CR: Customer’s 4018 A/C with FCY value
CR: 1% to Bank’s comm. A/C
f) (2) Where the bid result is unsuccessful for any customer, the accounting entries in (f) above will be reversed with value date of the initial debit date representing refund of earlier debit to customer’s account.
DR: Designated Sundry Account
CR: Customer’s A/C
g) Treasury will update all successful FX sold in their blotter.
h) Treasury advises Trade Services on the sale of FX by raising customers FX sales deal slips with the bid result from CBN
i) Trade will ensure each FX auction bid will be filed separately, which include FX bid list submitted to CBN, the FX bid list for successful customers as advised by CBN, the FX bid list for unsuccessful customers as advised by CBN while the deal slips issued by Treasury are filed in the customers respective transaction file.
j) During periods of system downtime on BANKS software, Trade will be unable to pass required accounting entries and as such it is required that the RM liaise with their respective branch HOP for the Naira equivalent of the bid amount and the 2% spread to be blocked against each customer’s account in their CABAL. This should be indicated on the bid request and duly signed off both by the RM and the branch HOP before forwarding to Trade.
N.B: It should be advised that the above procedure does not take into consideration BDC transactions.