The FX Global Code of Conduct: What the Industry is Saying

Chip Lowry, chair,
FXPA:
“The FXPA endorses the Global Code and its stated aim to promote a
robust, fair, liquid, open and transparent market, which is very much in line
with FXPA’s own principles. We recommend that our members demonstrate their
commitment to adopting the good practices set forth in the Code.
FXPA commends the global coordination and work of the BIS’s Foreign
Exchange Working Group in strengthening global standards for those operating in
the FX market. We fully support the adoption of its principles.”

James Kemp, managing director, GFMA Global FX
Division:
“From the outset, the GFMA’s FX Division has been fully supportive of
this initiative to create a Global Code of Conduct for FX. Given that foreign
exchange underpins international trade and investing, we believe a single,
global code provides a common reference point to encourage good practice and
re-build public confidence in the FX market. 

“This is an opportunity for all wholesale FX market participants to
demonstrate that they can put the right controls and guidance in place that are
consistent with the principles of the Code and that ensure the market is
operating fairly and effectively.

“In response to the first phase of the Code, published in May 2016, our
members have already made significant enhancements to their conduct and control
standards. For example, placing greater emphasis on the first Line of
Defence, strengthening the control environment and establishing more robust
oversight structures. More emphasis is being placed on conduct training, as
well as adherence to procedures and policies. However, there is no room
for complacency. With the complete Code now published, our members will
continue to strengthen their technology, policies and procedures to ensure they
align with the principles.”

Bruno Langfritz,
chair of the managing board, ACI – The Financial Markets Association:
 
“As
longstanding and active proponents of ethical conduct in financial markets we
welcome the new Global Code and the establishment of a single, global standard
of conduct for all professional FX market participants. Through education,
thought leadership and industry influence, we will continue to assist our
members – and the wider industry – to embrace the new Global Code and other
codes governing ethical conduct and professional integrity.”

David Woolcock,
chair of ACI’s Committee for Professionalism
: “We are proud to have contributed directly to the creation of the
new Code and believe that it provides an excellent framework for ethical
conduct that will continue to be enhanced and refined as market circumstances
demand. As champions and influencers of ethical conduct and market practice we
support its adoption throughout our global membership and look forward to
contributing to its continuing development.”

Neill Penney, managing director, trading, Thomson
Reuters:
“Thomson Reuters fully
supports the FX Global Code of Conduct and welcomes this cross-industry
initiative for us to work together to uphold fair and efficient FX markets. Thomson
Reuters continues to be fully committed to defining clear rules and increasing
transparency across our own transaction platforms but the code will only
succeed if all participants take a much more proactive approach to conduct –
both buy-side and sell-side participants must now play their part.”

Dan Marcus, CEO of ParFX: “ParFX welcomes the launch
of the FX Global Code for the wholesale foreign exchange market. This
initiative sets out guidelines and principles that will strengthen the
integrity and effectiveness of the FX market. 

“The Code aims to instil the notion of truly ethical
behaviour for all participants, and outlines an effective framework that,
amongst other things, promotes responsible and sustainable trading behaviour.
These key values now need to be hardwired into the FX market.

“We strongly support adherence across the industry and fully
intend to commit to the Code, as it aligns closely with our key principles of
fairness, equality and transparency.  

“In addition, we intend to promote the Code amongst our
customers by encouraging them to evolve their institutions’ FX practices so
they are consistent with the principles laid out in the Code.”

Harpal Sandhu, CEO and founder of Integral: The Code could very well be the regulatory catalyst for growth across global currency markets. We’ve seen this kind of effect of transparency on other industries, such as the cellular phone market, which now delivers greater pricing choice for consumers. This is because ultimately, transparency will lead to the democratization of FX which, in the long-term, benefits everyone by creating better liquidity.

“While it will not happen overnight, as the industry evolves, there is a real opportunity for participants to capture new market share and gain an edge on the competition.  For those who act now, the future is very bright.”

Kurt vom Scheidt, global head of FX, Saxo Bank: “We are proud to have been given the opportunity to participate as a member of the Bank of England’s FX Joint Standing Committee in reviewing and drafting this important and unprecedented industry-wide initiative. We strongly believe that a well-functioning FX market, centered on the principles of integrity, transparency, liquidity, openness and fairness, is essential to restoring trust in one of the largest and most important markets in the world.

“One of the unique aspects of the Code is the fact that it covers the entire FX industry -sell-side firms, buy-side firms, trading platforms and venues – and that it is global in nature. This will ensure that standards are consistently applied across the industry, levelling the playing field among market participants and restoring competition based on principles of transparency and integrity.”

Wholesale Markets Brokers’ Association (WMBA): The WMBA welcomes and strongly supports the launch of the FX Global Code for the wholesale foreign exchange (FX) market. Collectively,  WMBA member firms operate, arrange and execute the vast majority of the FX wholesale turnover around the world each and every day. Following the interim publication of the six leading principles underpinning the GCC in May 2016, WMBA members have been working with the Foreign Exchange Working Group (FXWG) towards full adherence to the final code and each aim to complete a timely attestation.

WMBA notes that the participation of market practitioners from all parts of the wholesale markets, including banks, buyside and platforms, together with the central banks and competent authorities, gives unparalleled strength and credibility to the code and its objectives. The Association will continue work with member firms to promote and support widespread adherence to the Global Code and to further evolve their stated FX practices and operations to be consistent with the principles and business practicalities that underpin them.

Curtis Pfeiffer, chief business officer at Pragma Securities: “There are few in the foreign exchange (FX) industry that can argue the FX Global Code is not necessary. The reputation of currency market has been tarnished in recent years by the behaviour of a small number of individuals. The FX Global Code is a significant effort by both central banks and the FX industry to spell out principles around ethics, best practices and transparency that can apply globally.

“The Code is certainly a good start, one that was needed, and will make the FX markets better for its participants. 

“We believe the Code will provide a solid framework for a wide range of best practices, and includes specific guidance on algorithmic trading. We strongly believe algorithmic execution, because of the control and transparency it can provide, combined with transaction cost analysis (TCA), will better help institutions to comply with the Code while simultaneously improving their execution quality.”

Seth Johnson, CEO of
NEX Markets:
“The creation of this Code, and the strong support for it
across the market demonstrates the way in which the FX market participants are
taking the lead in shaping and establishing an appropriate framework for the
industry. NEX Markets will adopt the principles and promote their use across
our customer base.” 

Darryl Hooker, global
head of spot and metals and head of FX EMEA:
“We’ve worked on the Code for
two years and the contribution from market participants and central banks has
been extensive. We believe the Code represents a fantastic opportunity for
market participants to increase trust and develop a consistent approach to some
of the key themes facing the market.”

Karim Haji, partner, KPMG UK: “Setting global
standards for the largest financial market in the world is welcome
progress. The FX market has an estimated $5.1 trillion daily trading volume,
its strength is integral to the global financial system and today marks an
important milestone in its efforts to rebuild trust. 

“Many banks have made substantial progress in improving
their systems and controls in response to FX trading misconduct but there are
still areas needing further attention. For example, how do you identify and
effectively mitigate conduct risk in electronic trading with features like last
look which allows dealers to reject client orders at their sole discretion? Or,
how do you ensure there is no conflict of interest when a desk handles both
house and client orders? There are further ongoing initiatives to address such
issues, like the work of the Fixed Income, Currencies and Commodities
(FICC) Markets Standards Board, which I’m sure the market is watching with
great interest.”

Colin Lambert

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