The Foreign Exchange Professionals Association (FXPA) will be promoting the FX Global Code of Conduct given that it addresses so many issues that the association has already been working on, according to its chairman.
“There’s a preamble in the Code that it wants to promote a robust, fair, liquid, open, transparent market and those are the exact same adjectives that we use in the FXPA [mission statement], and so we look at this as being very complementary to our mission and we’re certainly going to be promoting the Code,” says Chip Lowry, senior managing director at State Street Global Markets and chairman of the FXPA.
Lowry explains that the Code incorporates many issues that the FXPA has been working on, such as the role of last look and the nature of liquidity in the FX market, but adds that one focus for the group will continue to be advocating for regulatory harmonisation.
“When we go in and speak to the CFTC, we give them our view that there are certain rules under Dodd-Frank that have caused a bifurcation of liquidity in, say, NDFs between North America and Europe because of the way that margin rules work or SEF rules work. We’re an important voice for that so that’s going to continue as well,” he says.
Lowry also warns that FX market participants need to be aware of how regulations enacted in foreign jurisdictions, such as Mifid II, could have a direct impact on their businesses due to the global nature of the FX market.
“If people think that Mifid is not going to have global implications, then they really should review how the market works,” he says, adding that clients will employ processes required by this regulation globally unless there is a specific business case not to do so.
“To the extent that the regulation is prudent and is helpful, people will take it and apply it everywhere,” he says.
You can watch the full interview here: