On the 22nd of March 2017, the Bank for International Settlements (BIS) published a speech by Guy Debelle, Deputy Governor at Reserve Bank of Australia, on finalising and publishing the complete global code of conduct for the foreign exchange (forex or FX) market (the Code)
The Code will be publicly released in London on the 25th of May 2017 and will cover the world’s entire FX industry. This will include sell-side and buy-side as well as non-bank participants and platforms.
The Code cover areas such as ethics, information sharing, aspects of execution and confirmation and settlement as well as further aspects of execution. Including e-trading, platforms, prime brokerage, risk management and compliance.
In his speech, Mr Debelle remarked that the Code was needed as the FX industry has been suffering from a lack of trust in its functioning, between participants in the market and between the public and the market. Mr Debelle stated:
“The Code sets out global principles of good practice in the foreign exchange market to provide a common set of guidance to the market, including in areas where there is a degree of uncertainty about what sort of practices are acceptable, and what are not. This should help to restore confidence and promote the effective functioning of the wholesale FX market. (…)
We are working with the industry to produce a principles-based code rather than a set of prescriptive regulatory standards. It will not impose legal or regulatory obligations on market participants, nor will it supplant existing regulatory standards or expectations. But we do expect the principles in the Code to be understood and adopted across the entire FX market.”
The expectation of the Code’s authors is that once it is released market participants will adapt their businesses, where appropriate, and ask their FX counterparties to be committed to the Code’s principles.
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