Tag: Global Code of Conduct

Global Code of Conduct

Global Code Launch, FinTech, Liquidity Under the Lens

Next week, more than 200 FX professionals will gather at Forex Network New York to hear industry leaders debate the most pressing issues in the market today.
May 25 marks the release of the Global Code for the FX industry – a global set of principles guiding good market practice – which has been developed by The Bank for International Settlements’ )BIS) FX Working Group, which consists of market participants as well as central banks from 16 jurisdictions.
James Bergin, SVP and deputy general counsel at the Federal Reserve Bank of New York, will introduce a panel that will discuss the issues of note within the Global Code.

Would the Global Code Have Prevented FX Scandals?

One of the key questions surrounding FX Global Code of Conduct, of which the second part is due to be released on May 25, is whether it would have actually prevented the scandals that have dogged the FX industry in recent years.

Brigid Taylor, global managing director of ACI, argues that it would have.

“In financial markets people say: talk is cheap but my word is my bond. So if I say that I’m going to do something then I need to understand what that means, I need to understand how to apply that knowledge and then I need to do it,” says Taylor, adding that this knowledge ensures accountability.

FX Code Seeks to Drown Out Drumbeat of Scandal

Following on the heels of the FX Fix scandal that rocked the FX industry over the course of the past few years, the Bank for International Settlements (BIS) set up a working group to draw up a Global Code of Conduct for FX market participants, by FX market participants.

Several of those involved in crafting the Code addressed attendees of Profit & Loss Forex Network London to discuss some of the adherence and compliance mechanisms drafted into the Code.

Speaking at the event, Chris Salmon, executive director, Markets, at the Bank of England (BoE), said: “The drumbeat of scandal in relation to the FX industry created issues for market practitioners, but it also became a concern for the central banks of the world.”

LMAX Commits to Global Code – With a Caveat

LMAX Exchange has publicly committed to support the impending Global Code of Conduct in FX markets, however the operator has done so with a small caveat.
LMAX says it is “committed to serve as the industry’s best practice for transparency and fairness in FX execution and to lead, by example, the positive reforms aimed at restoring trust and integrity in the FX marketplace”.
It adds that it is from this stance that it is committing to the Code, “after we have been assured that the Code will be updated post- publication”.

What Do the Global Code, Brexit and Flash Crashes Have in Common?

This week, Wednesday March 29, Profit & Loss Forex Network London takes place against the backdrop of UK Prime Minister Theresa May invoking Article 50, formally starting Britain’s exit from the European Union. The conference represents a day filled with FX industry experts assembled to discuss everything from the Global Code to Brexit to Flash Crashes to the Liquidity Crunch and much more, kicking off with a panel of experts directly involved in crafting the Global Code, including the Bank of England’s director of Markets, Chris Salmon.

And Another Thing…

If the feedback to Monday’s column is anything to go by, I can confirm that last look remains a highly emotive issue in the foreign exchange industry. It will help though, if not only some people “take a chill pill” to calm what is a highly emotive debate, but also if they read the Global Code properly and, more pertinently, understand that market making is not a charity and often the client’s own execution style can contribute to market impact.

And Finally…

So my sources tell me the “fatal flaw” draft of the Global Code of Conduct is now complete and that the work is nearing its completion – only of course it is not, for as was explicitly stated at the start of the effort, the Code will be a living breathing thing that will continue evolve over time.
Which is good because as I understand it, there are still contradictions within the text, not least around the subject of (deep breath) last look and pre-hedging.

And Another Thing…

FXCM has been fined and banned from trading in the US retail FX market, but there are so many other questions to be asked regarding this whole mess – not least what should we do about the market maker named in the complaint? This case highlights the problems with the blurred line between retail and institutional because here we have a scandal that spans both segments and while at the retail end we can do something about it apparently, there are questions as to what, if anything, can be done about the institutional abuse.

And Another Thing…

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.