Friday, May 26, 2017 11.12AM / GlobalFxc / BIS
The Bank for International Settlements (BIS) has issued a long-awaited FX Global Code, which is a set of global principles of good practice in the foreign exchange market.
The code is a reaction to a number of foreign exchange fixing scandals that have tarnished the integrity of the foreign exchange market place over recent years.
The code has been developed by a partnership of central banks and market participants from 16 jurisdictions to provide a common set of guidelines to promote the integrity and effective functioning of the wholesale foreign exchange market.
It is expected to be adopted across the entire FX market, including the sell-side, buy-side, non-bank participants and platforms.
In addition, the BIS has provided a draft Statement of Commitment for firms to publicly demonstrate their adherence to the Code as it is believed that firms are more likely to adhere to the Code if their peers are doing so too.
“SWIFT welcomes and strongly supports the launch of the FX Global Code as we believe it will strengthen the integrity and effectiveness of the wholesale foreign exchange market. SWIFT has been a core part of the FX market for many years now and the services we provide are fully aligned with the intentions of the FX Global Code. We are very pleased to help support compliance with the Code,” says Stephen Lindsay, Head of Standards at SWIFT, the global payments organisation.
The Code provides a way for foreign exchange professionals to actively demonstrate that they adhere to the highest ethical standards.
"It’s only the beginning of an ongoing process as the industry must continue to strive to rebuild trust. We will evaluate the Code’s implications for our clients and our electronic trading platforms, as we move toward enhancing performance for all participants in the FX market,” says David Newns, global head of Currenex and SwapEx, as well as EMEA head of GlobalLink at State Street Global Markets.
The move by the BIS to set out new standards is a reaction to recent scandals in the foreign exchange industry which has dented the public's faith in the foreign exchange market.
Statement By IOSCO Board Chair Ashley Alder On The Launch Of The Foreign Exchange Global Code:
“As chair of IOSCO, I welcome the publication by BIS of a global code of conduct for wholesale foreign exchange markets on 25 May 2017. IOSCO is currently engaged in other areas of wholesale market conduct falling within the remit of securities regulators and anticipates that this work, which we aim to finalise later this year, will also help underpin proper functioning of global wholesale markets.”
A global code of conduct for the wholesale foreign exchange (FX) market was released today in London. The FX Global Code establishes a common set of guidelines for good practice in the FX market, a vital part of the global financial system with turnover of more than $5 trillion a day.
The guidelines, developed by the central bank Foreign Exchange Working Group (FXWG) in partnership with a private sector Market Participants Group, aim for a robust, fair, liquid, open, and appropriately transparent global FX marketplace. Their release completes a two-year effort by the FXWG, working under the auspices of the Markets Committee of the Bank for International Settlements.
The Code contains 55 principles covering areas including ethics, transparency, governance and information sharing. It also tackles complex topics such as electronic trading, algorithmic trading and prime brokerage.
"All of us recognise the need to restore the public's faith in the foreign exchange market. We share the view that the Global Code plays an important role in assisting that process and in helping improve market functioning," said Reserve Bank of Australia Deputy Governor Guy Debelle who chaired the FXWG.
The release was welcomed by central bank Governors from major advanced and emerging market economies and by regional foreign exchange committees.
A blueprint for achieving widespread adherence to the Code is laid out in a separate report, which outlines mechanisms to encourage market participants to follow the guidelines and ensure that the principles remain up to date.
"It is now up to each of us to follow through with our commitment to adopt the principles that we have established," said CLS Chief Executive Officer David Puth, who chaired the Market Participants Group. "I am extremely confident that those who wish to compete in this market will be more successful if they follow the principles that we have established together."
The Code will be maintained and updated by a new Global Foreign Exchange Committee.