The Global Foreign Exchange Committee announced the release today of a global code of conduct for the wholesale foreign exchange market developed by the central bank Foreign Exchange Working Group (FXWG) in partnership with a private sector Market Participants Group.
The code establishes a common set of guidelines for good practice in the FX market, a vital part of the global financial system, with a turnover of more than $5 trillion a day.
Released in London, the guidelines total 55 principles covering ethics, transparency, governance and information sharing, aimed at promoting a robust, fair, liquid, open, and appropriately transparent global FX marketplace. In addition, the code tackles topics such as electronic trading, algorithmic trading and prime brokerage.
Reserve Bank of Australia Deputy Governor Guy Debelle, Chairman at the FXWG, said: “All of us recognize 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.”
David Puth, Chair of the Market Participants Group and CEO of CLS, said: “It is now up to each of us to follow through with our commitment to adopt the principles that we have established. 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.”
A number of public and private entities have welcomed the release of the code, including central banks from major advanced and emerging market economies, regional foreign exchange committees, and financial services firms.
The Foreign Exchange Professionals Association (FXPA) stated: “The FXPA endorses the Global Code and its stated aim to promote a robust, fair, liquid, open and transparent market, which is very much in line with FXPA’s own principles. We recommend that our members demonstrate their commitment to adopting the good practices set forth in the Code,” said Chip Lowry, Chair of FXPA, adding that the institution “commends the global coordination and work of the BIS’s Foreign Exchange Working Group in strengthening global standards for those operating in the FX market. We fully support the adoption of its principles.”
Commenting on the code, Seth Johnson, CEO of NEX Markets said: “The creation of this Code, and the strong support for it across the market demonstrates the way in which the FX market participants are taking the lead in shaping and establishing an appropriate framework for the industry. NEX Markets will adopt the principles and promote their use across our customer base.”
In a statement, the WMBA said: “The Wholesale Markets Brokers’ Association welcomes and strongly supports the launch of the FX Global Code for the wholesale foreign exchange (FX) market. Collectively, WMBA member firms operate, arrange and execute the vast majority of the FX wholesale turnover around the world each and every day.”
Supporting the code, James Kemp, Managing Director of Global FX at GMFA (Global Financial Markets Association), said: “In response to the first phase of the Code, published in May 2016, our members have already made significant enhancements to their conduct and control standards. For example, placing greater emphasis on the first Line of Defence, strengthening the control environment and establishing more robust oversight structures. More emphasis is being placed on conduct training, as well as adherence to procedures and policies. However, there is no room for complacency. With the complete Code now published, our members will continue to strengthen their technology, policies and procedures to ensure they align with the principles.”