The Global Foreign Exchange Committee (GFXC) has announced the launch of the Foreign Exchange (FX) Global Code (the Code). The Code was developed by a partnership between central banks and market participants from 16 jurisdictions around the globe.
The Code is a set of global principles of good practice in the FX market, developed to provide a common set of guidelines to promote the integrity and effective functioning of the wholesale FX market. It is intended to promote a robust, fair, liquid, open, and appropriately transparent market in which a diverse set of market participants, supported by resilient infrastructure, are able to confidently and effectively transact at competitive prices that reflect available market information and in a manner that conforms to acceptable standards of behaviour. The Code does not impose legal or regulatory obligations on market participants nor is it a substitute for regulation. Instead it is intended to serve as a supplement to any and all local laws, rules and regulation by identifying global good practices and processes.
The Code is organised around six leading principles:
- ethics: market participants are expected to behave in an ethical and professional manner to promote fairness and integrity of the FX market;
- governance: market participants are expected to have a sound and effective governance framework to provide for clear responsibility for and comprehensive oversight of their FX market activity and to promote engagement in the FX market;
- execution: market participants are expected to exercise care when negotiating and executing transactions in order to promote a robust, fair, open, liquid and appropriately transparent FX market;
- information sharing: market participants are expected to be clear and accurate in their communications and to protect confidential information to promote effective communication that supports a robust, fair, open, liquid and appropriately transparent FX market
- risk management and compliance: market participants are expected to promote and maintain a robust control and compliance environment to effectively identify, manage, and report on the risks associated with their engagement in the FX market; and
- confirmation and settlement processes: market participants are expected to put in place robust, efficient, transparent, and risk mitigating post-trade processes to promote the predictable, smooth and timely settlement of transactions in the FX market.
The Code will be periodically reviewed and is expected to evolve over time.
In addition, the GFXC has published a request for feedback on “last look” practices in the FX market. The request explains that this is GFXC’s first request for feedback on the Code and intends to periodically request feedback from market participants and others on specific topics. The deadline for comments on the request for feedback is 21 September 2017.
The FCA and the Bank of England have also issued statements responding to the launch of the Code. The Code will be maintained and updated by the GFXC.
View GFXC launches complete FX Global Code, 25 May 2017
View Bank of England statement on the launch of the FX global code, 25 May 2017
View FCA statement on the publication of the FX global code, 25 May 2017