Galen Stops sat down at Consensus 2017 with Sandra Ro, executive director and head of digitisation at CME, to talk about the nascent technologies the exchange group is exploring and how they could improve the way that assets are traded.
Broadly speaking, CME Group’s “digitisation” effort can be divided up into two distinct categories. One is related to how blockchain, or distributed ledger technology (DLT), can replace or improve core infrastructure in financial markets, the other, interestingly, is the “digital tokenisation” of physical assets.
The FX Global Code is in many ways as “strong as any rule, any regulation or frankly any law could put in place”, David Puth, chair of the Market Participants Group and CEO of CLS, claims.
Speaking to Profit & Loss on the sidelines of a press conference to launch the complete FX Global Code, Puth addressed the key question of just how much teeth an essentially voluntary set of principles can have, noting that while it may not stop misconduct it sets a very high standard of expected behaviour.
Investors looking for exposure to emerging markets FX have limited options, with most EM indices offering exposure (currency hedged or otherwise) to local equity and bond markets. They will soon have the opportunity to invest directly in EM FX markets, however as T3Index is set to launch its E8 index, which it says it a first of its kind as it measures the performance of the world’s eight largest emerging market exchange rates. T3Index is a research driven financial indexing firm that specialises in derivatives benchmarking and the development of investible, proprietary indices that track related strategies across a range of asset classes.
Today marks the release of the FX Global Code of Conduct - a much anticipated event in the foreign exchange industry. Here is the reaction of senior figures within the industry. Chip Lowry, chair, FXPA: “The FXPA endorses the Global Code and its stated aim to promote a robust, fair, liquid, open and transparent market, which is very much in line with FXPA’s own principles. We recommend that our members demonstrate their commitment to adopting the good practices set forth in the Code. FXPA commends the global coordination and work of the BIS’s Foreign Exchange Working Group in strengthening global standards for those operating in the FX market. We fully support the adoption of its principles.”
In addition to the Code, central bank governors under the auspices of the Bank for International Settlements have formally announced the formation of a Global FX Committee (GFXC), with the Bank of England’s head of markets, Chris Salmon, at the helm.
One of the core objectives of the GFXC will be to promote and maintain the FX Global Code by ensuring that the guidance set out remains relevant and taking into account good practices for supporting adherence. It will seek to promote collaboration and communication among local foreign exchange committees and other jurisdictions with significant FX markets.
The Bank for International Settlements’ (BIS) FX Working Group formally launched the full version of the FX Global Code of Conduct today in London, following the release of stage one in New York last year.
The Code contains 55 principles covering areas including ethics, transparency, governance and information-sharing. It also tackles complex topics such as electronic trading, algorithmic trading and prime brokerage.
“All of us recognise the need to restore the public’s faith in the foreign exchange market. We share the view that the Global Code plays an important role in assisting that process and also in helping improve market functioning,” says Reserve Bank of Australia deputy governor Guy Debelle, who chaired the FXWG.
Along with today’s launch of the full Code, the FX Working Group (FXWG) has also published its Blueprint for Achieving Adoption, in which it lays out four key tenets. These are that the Code should be clear, relevant and reflect good practice in the FX Market; it is the responsibility of market participants to take appropriate steps to adopt the Code in their day-to-day practices and culture; it is the role of central banks to lead by example and demonstrate their commitment to promoting and maintaining good market practice; and it is important that market participants and central banks maintain an active engagement with the Code and have appropriate structures in place to ensure that it remains relevant.
If there is one subject upon which I have expounded a lot on recent months it is the FX Global Code of Conduct, so let’s keep this relatively brief.
Today has the potential to be a landmark day in the FX industry – a moment when it passes from being an unregulated market with what we now know were obvious cultural problems stemming from the technological revolution, to an unregulated market in which everyone knows the definition of bad practice in the context of a predominantly electronic market.
BNP Paribas has been fined $350 million as part of a consent order entered into with the New York State Department of Financial Services (DFS) for “significant, long-term violations of New York banking law” in the bank’s global foreign-exchange business.
DFS says its investigation found the improper conduct at BNP included collusive activity by traders to manipulate FX prices and benchmark rates; executing fake trades to influence the exchange rates of emerging market currencies; and improperly sharing confidential customer information with traders at other large banks.
Kevin Cudahy joins Cürex Group in New York as a managing director, business development. He reports directly to Jamie Singleton, chairman and CEO.
A 25-year FX industry veteran, Cudahy was most recently head of FX sales, North America, at Bloomberg Tradebook, which shuttered its FX group in January. Cudahy joined Tradebook in mid-2013. Prior to that, Cudahy spent more than 10 years at BNP Paribas, where he worked on the FX sales desk. He also spent a period at CCM Securities.