Copyright 2016-2018 © All Rights Reserved provided by Compound Growth Ltd

Contact us About $ ¥ $ € £ € € € £ ¥ £ $ £ $ ¥ ¥ € ¥ € £ ¥ € £ ¥ € £ € $ FX  GLOBAL CODE $

Strengthening Principles & Code of Conduct Standards in FX Markets

$ £ $ ¥ $ € € $ ¥ ¥ ¥ ¥

Principle 6: Confirmation & Settlement

Confirmation & Settlement: FX Market Participants are expected to have risk-mitigating processes to promote timely, efficient and robust confirmation & settlement.

“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”

Phase 1: Material for Global FX Code May 2016, FXWG

Principle 6 of the FX Global Code:

Participants within the FX Market are expected to put into place processes to promote the predictable, smooth and timely settlement of transactions within the FX Market. These processes should be risk-mitigating as well as transparent, efficient and robust.

The FXWG advise there are a number of principles that relate to systems and processes regarding confirmation and settlement of FX transactions and that these principles should be applied in a consistent manner by FX Market Participants. These principles are:

Overarching Principles

  1. FX Market Participants should establish consistency between their operating practices, their documentation and their policies for managing legal and credit risk.
  2. FX Market Participants should institute robust frameworks for monitoring and managing capacity in normal and peak conditions.
  3. Participants in the FX Market are encouraged to implement straight-through processing - i.e. automatic transmission of trade data from their front office systems to their operations systems.
  4. Any novations, amendments and/or cancellations of transactions should be conducted by Market Participants in a carefully controlled manner.

Confirmation Process

  1. Trades should be confirmed by Market Participants as soon as practicable and in a secure and efficient manner.
  2. Market Participants should review, affirm and allocate block transactions as soon as practicable.
  3. Confirmation and settlement discrepancies should be identified and resolved by Market Participants as soon as practicable
  4. FX Market Participants should be aware of the particular confirmation and processing features specific to life cycle events of each foreign exchange product.

Netting & Settlement Processes

  1. Settlement risk should be measured and monitored by Market Participants and they should seek to mitigate that risk when possible.
  2. Standing Settlement Instructions (SSIs) should be utilised by Market Participants.
  3. Direct Payments should be requested by Market Participants.
  4. Adequate systems should be in place by Market Participants to allow them to project, monitor and manage their intra-day and end-of-day funding requirements as well as to reduce potential complications during the settlement process.

Account Reconciliation Processes

  1. Timely account reconciliation processes should be performed by Market Participants.
  2. Settlement discrepancies should be identified by Market Participants and compensation claims submitted in a timely manner.

Related Reading:

Confirmation & Settlement

FX Market News


Principle 5: Risk Management & Compliance

Contact us $ £ € € £ $ ¥ € ¥ € £ £ $ ¥ $ € € $ ¥