The FX Global Code is over one year old and is generally seen to have been a success in establishing a blueprint for conduct in the markets. The number of firms adopting has been steadily growing but at such an uneven pace that some are wondering exactly how successful it will be? Next week’s Forex Network Chicago conference will kick off with an armchair debate and a panel session looking at the impact of the Code from two perspectives.

Firstly, the armchair debate will address the hottest topic in FX markets currently – is pre-hedging front running? This critically important question of pre-hedging, which is explicitly endorsed (with the appropriate disclosures and transparency) by the FX Global Code is at the centre of the conviction of former HSBC global head of FX trading Mark Johnson. An appeal is underway but what would the consequences of a US court confirming the jail sentence? 

This and other questions will be addressed in both the debate and the panel session to follow. Where would the rejection of Johnson’s appeal leave the Code in the US and, perhaps more important, where would this leave the US FX market relative to other jurisdictions? Can a US firm adhere to the Code if pre-hedging is found to be front running by a US court without running the risk of facing sanction itself?

The panel session will also consider broader themes relating to the Code, for example, important segments of the industry, such as asset managers, hedge funds and corporates are seen to be under-represented in the ranks of institutions to sign a Statement of Commitment to the Code – as are some smaller market participants like proprietary trading shops. 

If the Code is to achieve broader adoption, what needs to be done? Where are the areas still likely to cause discord in FX markets and how does the Code help protect the industry from the lowest common denominator when it comes to behaviour? 

Forex Network Chicago takes place from September 24 – 26 at the Westin River North, so register today for Profit & Loss’s flagship conference and technology exhibition and hear expert speakers from investment firms, market utilities and spot liquidity providers as they offer their takes on disclosed bilateral trading, non-banks’ role in liquidity events, agency versus principal-based models, and more. 

Profit & Loss

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