Recent concerns about the integrity of trading around the setting of FX benchmarks were first aired publicly in June 2013. This was followed by increased media interest and the launch of investigations by a number of regulators into alleged misconduct in the FX market. In early 2014 the Financial Stability Board (FSB) formed a working group whose mandate was to undertake an analysis of the FX market structure and incentives that may promote particular types of trading activity around the benchmark fixings.

The FSB has now published the final version of its working group report on FX benchmarks.

The report sets out a number of recommendations for reform in the FX markets and in the benchmark rates that have been identified as pre-eminent by market participants – in particular, the WM/Reuters (WMR) 4pm London fix produced by the WM Company. These recommendations fall into the following broad categories:

• the calculation methodology of the WMR benchmark rates;
• recommendations from a review by IOSCO of the WM fixes – this review is included in the report and in a separate report published by IOSCO;
• the publication of reference rates by central banks;
• market infrastructure in relation to the execution of fix trades; and
• the behaviour of market participants around the time of the major FX benchmarks (primarily the WMR 4pm London fix).

View Foreign Exchange benchmarks – final report, 30 September 2014