As he assumes the reins of the Global FX Committee, Reserve Bank of Australia deputy governor Guy Debelle talks to Colin Lambert about the impact of the FX Global Code and the importance of maintaining momentum as the GFXC seeks to broaden its reach. Colin Lambert: We are now more than two years on from […]
Today’s column has a problem with complacency and worries about the chances of future generations forgetting the principles of the FX Global Code the way they did previous best practice documents. Luckily, being a “solutions based” forum, it has an idea that some may find controversial to help ensure that doesn’t happen.
Why is it controversial? How does employing members of the Cartel and other chat rooms – people who have either faced potential jail time or admitted guilt to the authorities – grab you?
Join members of the Foreign Exchange Professionals Association (FXPA) on Wednesday, May 30, for a webinar on the “FX Global Code: One Year Anniversary – Where are We?” at 10am (Eastern US)/3pm (UK)/10pm (Singapore).
This webinar, hosted by the FXPA, takes a look at how firms are approaching adherence to the FX Global Code of Conduct in the FX markets, which was released on May 25, 2017.
Join FXPA’s chairman, Chip Lowry, senior managing director of State Street Global Markets; David Puth, vice chair of the Global Foreign Exchange Committee and CEO of CLS Bank International; Lisa Shemie, FXPA board member and chair of the policy committee, and associate general counsel, chief legal officer of Cboe FX Markets and Cboe SEF at Cboe Global Markets; and Mark Bruce, FXPA’s chair of the Global Code Working Group and head of FICC at Jump Trading.
With just over a month to go before adherence is expected of market participants, the Global FX Committee (GFXC) has announced that “well over” 100 Market Participants have now made Statements of Commitment to the FX Global Code less than one year after its launch.
The majority of these statements can be found on the eight public registers around the world that have similarly launched since the release of the Code, however there is no obligation to publish a statement on a register.
The Australian Securities and Investments Commission (ASIC) has released a report to coincide with the FX Global Code of Conduct which seeks to redress shortcomings in behaviour as well as to outline good practice on spot FX desks in the Australian market.
The report, which was compiled following an investigation into local banks’ practices and led to fines against the top five Australian banks, says, “We observed a lack of appropriate training and guidance, particularly in relation to handling confidential information, considering client interests and conflicts of interest, and executing stop loss and fix orders. Training sessions were rarely specific or tailored to the role of employees operating in the spot FX market. We also observed that employees frequently engaged in practices which were learned from their peers without question or challenge.”
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.
ACI’s explicit support for the FX Global Code helps plug an important gap in the Code’s reach – for it moves its influence beyond the developed and major emerging markets and into some real local markets.
It is important that the Code reaches all market participants, so there are other gaps to be filled, not least the small private trading firms. Can we repeat the example of ACI to help reach these firms, as well as others that should be more aware of their responsibilities?
ACI – The Financial Markets Association has announced that 2017 it is mandating its 9,000 members to explicitly commit to the FX Global Code of Conduct, the complete version of which will be released on May 25.
“In the three years since the process began to develop a single, global code of conduct for the FX market, the Foreign Exchange Working Group (FXWG) and Market Participants Group (MPG) have made enormous strides forward,” says Brigid Taylor, managing director of ACI.
This is very short and sweet and to the point.
We continue to hear people express concerns over how the Global Code of Conduct is going to be implemented and how adherence can be assured.
It’s simple. As an addendum to every copy of the Code, that should be attested to by every participant in the wholesale foreign exchange market, there should be attached a copy of yesterday’s US Department of Justice’s indictment of three former members of the Cartel.