Strengthening Principles & Code of Conduct Standards in FX Markets
The Global Code for the FX Market: First Phase
Thefirst phase of the FX Global Code of Conduct for the wholesale Foreign Exchange (FX) Market has been released, known simply as The Global Code.
“The Global Code should serve as an essential reference for Market Participants when conducting business in the wholesale FX Markets and when developing and reviewing internal procedures”
Phase 1: Material for Global FX Code May 2016, FXWG
FX Market News: First Phase Material of the Global Code Released
This month on 26th May 2016, the Bank of International Settlements (BIS) released the first phase of the FX Global Code of Conduct for the wholesale Foreign Exchange (FX) Market. Also referred to as simply The Global Code, the FX Global Code of Conduct is based upon principles that cover ethics, governance, information sharing, execution, risk management & compliance as well as confirmation & settlements (see also The Six Principles of the Global FX Code).
Whilst the full and final Global Code is still to be published (expected in a year’s time), this first phase material provides insight into how the Global Code might impact upon current operations for FX Market Participants who wish to demonstrate compliance.
The common set of guidelines contained within The Global Code aim to promote the integrity and effective functioning of the institutional FX market, and whilst they do not impose legal or regulatory obligations upon FX Market Participants, it is thought that incorporating aspects of the Global Code into internal FX policies and processes “may be relatively easy.”
About The Global Code of Conduct for the FX Market
In July last year, the Foreign Exchange Working Group (FXWG) was established to begin development of The Global Code. The FXWG is a committee comprised of FX Market Participants such as banks, buy-side firms, market infrastructures, family offices, trading platforms, algorithmic trading firms, investment advisers, brokers and other non-bank participants as well as Central Banks from a number of jurisdictions.
Whilst Phase 1 lays out the founding principles the Global Code is based upon, Phase 2 (that the FXWG are working upon now), is expected to focus upon electronic trading.