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FXC’s Snyder Unveils Retail Focus

Speaking at last week’s Profit & Loss Forex Network Chicago conference, Mark Snyder, chairman of the Foreign Exchange Committee, said the FXC is in the final drafting stage of a market letter on retail trade. The document reiterates calls for good legal documentation and the importance of understanding know-your-customer (KYC) obligations and contractual relationships. “We will underscore that FX dealers run a reputational risk if they are linked to a chain of transactions that result in an illegal or unfortunate consequence,” he said.

The letter is part of the FXC’s aim to reach out to new market participants to make them aware of all that it has done with traditional dealers and non-dealer participants “so that they understand the ‘rules of the road’ and can efficiently engage in this great market with the full awareness of the best practices, conventions and indeed obligations of participation”, Snyder told delegates.

“In the letter we will encourage market participants to review their legal and contractual relationships with clients, intermediaries, vendors and other entities that might be considered counterparties,” he continued, “And we will recall that the existence of multiple intermediaries does not obscure the responsibility of market participants to comply with existing anti-money laundering, counter-terrorism, bank secrecy and privacy regulations.”

Appendices to the letter will set out detailed descriptions of the services provided by aggregators that act as portals for retail investors who trade FX on a margin basis and for banks or e-commerce platforms that allow their customers to trade at prices quoted by a third party bank through white labelling, he explained.

“The intention of the committee in this exercise is simply to remind everyone of the potentially catastrophic impact of reputational risk, consistent with our belief that business in our market should be conducted prudently, legally and ethically,” said Snyder.

Profit & Loss

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