Commercial banks in Somalia were ordered by the central bank to shut down an undisclosed number of Forex -related accounts without explanation. Local media outlets claim that any decision to do so would be in line with the Somali Central Bank’s past warnings about foreign exchange trading.
Despite its struggling economy, a handful of FX brokers are brazenly chasing business in a gray area of the country’s trading sector, even as Mogadishu regulators vow to wipe out such activities.
In order to guarantee the security of Somalis’ funds, the central bank said it will monitor accounts being used for FX broking services and may impose restrictions including the closure of such accounts.
Just yesterday, the central bank released a circular to financial institutions asking them not to hold banking accounts for any firms involved in currency trading.
“This is to inform you that the Board of Directors of the Somali Central Bank, in its 43rd session held on 28-10-2019, has issued resolution number 43/G, which directs all private commercial banks in the country to close the accounts of all Foreign Exchange (Forex) traders,” the statement signed by the bank’s Deputy Governor, Maryam Abdullahi Yusuf said.
FX trading grows across Africa
“The Central Bank hereby instructs the concerned banks to implement this resolution and further provide the central bank with an appendix on these accounts and the amount of money they are holding,” it further states.
Earlier in October, Somali security forces raided online forex centers in Mogadishu. They raided three offices of a company called Camel Online Forex and directed the staff to stop operations and close their business.
Those actions, however, have not stopped locals trading forex on platforms operated by foreign brokers, which appear to be exploiting regulatory loopholes, notably that their business is based offshore.
There is currently no regulatory framework governing online Forex Trading in Somalia. However, it is estimated that a few hundred local investors are participating through offshore brokers. Somali immigrants are also aggressively targeted over social media by introducing brokers and other representatives of the industry.
Retail forex trading has seen huge growth across Africa in recent years, with Nigeria and South Africa are the two largest African markets, but other nations have also seen a massive surge in interest from the public.
Commercial banks in Somalia were ordered by the central bank to shut down an undisclosed number of Forex -related accounts without explanation. Local media outlets claim that any decision to do so would be in line with the Somali Central Bank’s past warnings about foreign exchange trading.
Despite its struggling economy, a handful of FX brokers are brazenly chasing business in a gray area of the country’s trading sector, even as Mogadishu regulators vow to wipe out such activities.
In order to guarantee the security of Somalis’ funds, the central bank said it will monitor accounts being used for FX broking services and may impose restrictions including the closure of such accounts.
Just yesterday, the central bank released a circular to financial institutions asking them not to hold banking accounts for any firms involved in currency trading.
“This is to inform you that the Board of Directors of the Somali Central Bank, in its 43rd session held on 28-10-2019, has issued resolution number 43/G, which directs all private commercial banks in the country to close the accounts of all Foreign Exchange (Forex) traders,” the statement signed by the bank’s Deputy Governor, Maryam Abdullahi Yusuf said.
FX trading grows across Africa
“The Central Bank hereby instructs the concerned banks to implement this resolution and further provide the central bank with an appendix on these accounts and the amount of money they are holding,” it further states.
Earlier in October, Somali security forces raided online forex centers in Mogadishu. They raided three offices of a company called Camel Online Forex and directed the staff to stop operations and close their business.
Those actions, however, have not stopped locals trading forex on platforms operated by foreign brokers, which appear to be exploiting regulatory loopholes, notably that their business is based offshore.
There is currently no regulatory framework governing online Forex Trading in Somalia. However, it is estimated that a few hundred local investors are participating through offshore brokers. Somali immigrants are also aggressively targeted over social media by introducing brokers and other representatives of the industry.
Retail forex trading has seen huge growth across Africa in recent years, with Nigeria and South Africa are the two largest African markets, but other nations have also seen a massive surge in interest from the public.
FAQs
Those affected are forex accounts held by trading companies in all commercial banks across the country, a move that the government says could save the struggling economy of Somalia.
Is forex trading legal in Somalia? ›
There are no laws or regulations in Somalia that explicitly prohibit forex trading. The activity is not considered illegal, as long as it is conducted through legitimate and transparent channels.
What is the role of the Central Bank regarding FX? ›
Central banks impact currency exchange rates through factors such as interest rate adjustments, monetary policy decisions, and interventions in the forex market. These actions can influence investor sentiment, capital flows, and the value of a country's currency.
Who owns the Central Bank of Somalia? ›
Central Bank of Somalia
| Headquarters | Mogadishu, Somalia |
|---|
| Established | 30 June 1960 |
| Ownership | 100% state ownership |
| Governor | Mr. Abdirahman M. Abdullahi |
| Central bank of | Somalia |
3 more rowsThe Central Bank of Somalia uses a judicious mix of both on-site examination and off-site examination methodology. All financial institution (banks and nonbanking Business) is subjected to a semi-annual on-site examination.
Is forex trading banned in USA? ›
Is forex trading legal in the United States? Yes, forex trading is legal in the U.S. and regulated by the Commodity Futures Trading Commission (CFTC). Forex brokers in the U.S. are required to register as Futures Commission Merchants (FCMs) and Forex Dealer Members (FDMs) with the CFTC and NFA.
Who trades with Somalia? ›
Somalia has bilateral trade agreements with Turkey, Kenya, Uganda, Ethiopia, Djibouti, UAE, Qatar, South Africa, Italy, Saudi Arabia, Pakistan, Sudan, and China.
What happens when a central bank buys foreign currency? ›
Central banks perform market intervention by buying and selling in the foreign exchange market. When a central bank buys a foreign currency, it increases demand for it, thereby strengthening the currency.
How do banks make money from FX? ›
How do banks make money on FX? Banks make money on FX operations in several ways. The capital markets departments typically make money through market making and trading operations - collecting bid/ask spread and taking positions in the market.
What are the top 10 banks in the forex market? ›
The leading commercial banks that move the Forex Markets are Citi Bank, JP Morgan, UBS, Barclays Bank, Deutsche Bank, BAML, Goldman Sachs, HSBC, Morgan Stanley, etc.
Salaam Somali Bank, often abbreviated to SSB, is a Somali commercial bank. It is headquartered in Mogadishu, Somalia. SSB is one of the largest privately owned banks in the country.
Who is the manager of Central Bank of Somalia? ›
Mohamed Abdi holds a Bachelor's degree and MBA from the University of District of Columbia.
Which Central Bank is the richest? ›
Federal Reserve Bank of the United States (US$7.54 trillion): Bank of Japan (US$5.21 trillion): People's Bank of China (US$5.14 trillion): Deutsche Bundesbank (US$2.72 trillion):
Who is the governor of the Central Bank of Somalia? ›
The Central Bank of Somalia is led by Governor Abdirahman Mohamed Abdullahi, who's also the chairman of the bank's board of directors. The governor's office is comprised of the following sections: Planning and Management. Legal Unit.
What is the strategic plan of the Central Bank of Somalia? ›
CBS is currently in the midst of undertaking critical reforms, guided by our Strategic Plan (2020 – 2024). We have adopted a new organizational structure and initiated the process of transforming CBS from being primarily a fiscal agent for the government into a modern, effective, and policy-oriented Central Bank.
How many banks are there in Somalia? ›
Thirteen licensed banks are active in the country, the largest of which include the International Bank of Somalia (IBS), Premier Bank, Salaam Somali Bank, Dahabshiil International Bank, and Amal Bank.
Can you trade forex in Africa? ›
In countries like South Africa, Ghana, Kenya, and Nigeria, all forex trading companies are required to be regulated by their respective regulatory agencies. A closer look shows that many forex traders in Africa prefer using both local and international exchanges.
Does Somalia have a stock exchange? ›
Overview. The Somali Stock Exchange (SSE) was founded by the management of the Somali Economic Forum (SEF), whose principal aim is to encourage Foreign Direct Investment (FDI) into Somalia's growing economy.
Is there a foreign direct investment in Somalia? ›
Somalia foreign direct investment for 2022 was $0.64B, a 5.82% increase from 2021. Somalia foreign direct investment for 2021 was $0.60B, a 12.55% increase from 2020.
Is trading forex a crime in Nigeria? ›
Forex trading is legal in Nigeria, but it is not regulated by any national governing body. Therefore, traders in the country need to understand that when trading with Nigerian brokers, or brokers who offer forex trading in Nigeria, they may not have the same protections as traders in some other countries.
