Whilst the publicity associated with the issue is unwelcome and untimely, last week’s revelation that a group of banks face a lawsuit over their use of (although it is probably more accurate to say ‘lack of disclosure of’) last look should have focused a few minds on the feedback process being run by the recently-formed Global FX Committee.
We need to be clear about this – if this lawsuit is settled or lost by the banks then more will inevitably follow.
I fundamentally believe that last look remains the biggest threat to the industry’s development and recovery from past ills, and to help build understanding further you have five weeks or so to submit your feedback as requested by the Global FX Committee on the language in Principle 17. I suspect I may have some bad news for the GFXC, though, because while there is consensus around the specific language, there also seems to be a consensus that it does not cover the subject in enough depth.
The feedback period for Principle 17 of the Global Code - dealing with last look in FX markets - is over and we await the outcome. My understanding is that the outcome will not be as clear cut as many thought just a short while ago, but, sticking my neck on the line, I am happy to predict which way the decision will fall. After all, the legal industry is already circling FX on this issue - why give it more ammunition?
The Global Foreign Exchange Committee (GFXC) has published all responses to its request for feedback on the language set out in Principal 17 of the FX Global Code of Conduct, which looks at the practice of last look. The feedback has been published ahead of an expected decision by the GFXC over whether to change the wording and while it indicates a majority in favour of a strengthening of certain practices involving last look opinion is by no means universally in favour of change.
The Global Foreign Exchange Committee (GFXC) met this week to consider the results of its consultation over the wording in Principle 17 of the FX Global Code of Conduct, specifically relating to the use of last look, and says it has concluded that Principle 17 “should indicate that market participants should not undertake trading activity that utilises the information from the client's trade request during the last look window”.
At the same time, however, the GFXC has recognised the concerns by some involved in the feedback process that such an action would negatively impact the quote and cover, or riskless principal model
The Global Foreign Exchange Committee (GFXC) has issued a paper on the results of a survey it conducted with the intention of measuring the baseline level of awareness and adoption of the FX Global Code by market participants.
The survey was undertaken at the end of September 2017 and sent to more than 500 FX market participants globally, including firms not involved in the creation of the Code. The survey was conducted with the objective of gathering a diverse set of views from firms representing different jurisdictions, sectors, sizes and levels of activity in the FX market.
2018 is a big year for the FX Global Code as it will celebrate its first anniversary – a date by which all participants are expected to have adhered to the code’s principles. Will the code be a success? Colin Lambert thinks he has the answer.
It was, and still is, depressing having to read through legal papers and regulatroy notices on a regular basis, all of which deal with misconduct in FX markets, and nobody whould be misguided enough to think that such actions will not continue in the year ahead. They will, and probably the year after that.
There is an upside in having to rake over the ashes of past misdemeanours, however, because it offers a timely and regular reminder of the importance of the FX Global Code.
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.
David Puth, Vice Chair of the Global FX Committee (GFXC), will be completing his term in this role with the group he helped form next month.
Puth, who is the CEO of CLS Group, has been heavily involved in the creation of the Global Code, the first iteration of which was released in May 2016, and then published in its final form in May 2017. Firms were anticipated to commit adherence by around the one-year anniversary in May.
When work on the Global Code first began, it was in the form of a public/private sector partnership, with Puth leading the private sector side through the Market Participants Group (MPG), which worked together, but separately, with the public sector side, led by the Reserve Bank of Australia’s Deputy Governor Guy Debelle.
Neill Penney, co-head of Trading at Thomson Reuters, will serve as the London Foreign Exchange Joint Standing Committee’s (FXJSC) private sector representative on the Global Foreign Exchange Committee (GFXC).
The FX Global Code was launched in May 2017 to promote integrity, fairness, transparency and effective functioning of the global foreign exchange markets. Alongside the launch of the Code, the GFXC was established to promote and maintain the Code and to facilitate communication between local foreign exchange committees around the world, each of which appoints two members to the GFXC, one from the private sector and one from the public sector.
The Global Foreign Exchange Committee has named Simon Potter executive vice president of the Federal Reserve Bank of New York, as chair for a one-year term. At its meeting this week in Johannesburg, it also nominated and elected Adrian Boehler, global co-head of FXLM and commodity derivatives at BNP Paribas, and Akira Hoshino, senior fellow and managing director, head of global markets trading at MUFG Bank, to serve together as co-vice chairs for a two-year term.
Speaking to Profit & Loss after what Potter says was a very productive meeting, he is keen to stress the diversity and engagement represented by the GFXC.
Much has been made of the low buy side sign up to the FX Global Code, but as Colin Lambert finds out, it is likely only to be a matter of time.
Talk to senior members of the Global FX Committee and one can discern a sense of exasperation when they are asked (probably for the tenth time that day) about the lack of buy side adoption of the FX Global Code. The exasperation stems from what is the thorn in the side of the GFXC that is low adoption rates.
The FX industry is advancing how it deals with certain issues, but the pipeline of areas in need of clarification and further debate shows little sign of slowing down. Two areas that concern me at the moment are exactly how platform operators are enforcing their rulebooks - are they being fair and balanced to both LPs and LCs? - and exactly what constitutes "full amount" trading? An open and data-backed discussion will solve the latter, but I wonder if we need an industry ombudsman for the former?