ACI has been around for 44 years. Julie Ros looks at the past, present and future of the global financial markets association.
Since its humble beginnings back in 1955, ACI-The Financial Markets Association, as it is now called, has grown to become the world’s largest international wholesale trade association, representing the biggest and most transparent market in the world. It boasts 24,000 members and spans 82 countries around the globe.
So what is ACI? ACI was founded, and is still headquartered, in Paris-hence its original name, Association Cambiste Internationale, which literally means the Association of International Dealers, by a group of FX dealers in London and Paris. Today, ACI has affiliated financial markets associations in 59 countries and individual members in an additional 23.
ACI updated its image with a name change in late 1996 to appeal to the wider financial markets, having previously been known primarily as an association for foreign exchange and money market dealers.
Its roots were founded around social activities-which provided a forum for dealers to meet and forge the important relationships they could later rely on in business. But it was not all fun and games, says the current ACI president, Heering Ligthart, who also works in the treasury division of Fortis Bank Nederland in Amsterdam.
“ACI has always been a lot more than a social club. Early on, ACI organised training programmes and seminars to address market issues. And it created the first Code of Conduct (Behaviour) for the market,” says Ligthart. “The first Code of Conduct and the training programmes are two pillars that were established at the beginning, and which are now at the forefront of our priorities. Unfortunately, they never really got the attention they should have.”
The social club image is one that ACI has been struggling to shake. However, as Ligthart points out, ACI continues to support the social aspects of its unique organisation, because it views communication and relationship building as the foundations for its work. Afterall, with 24,000 members represented by two main bodies-the Executive Committee and Council-ACI draws upon its global network to keep its work attuned to the developments that affect each region differently.
In 1998, for example, the local arm of ACI in Singapore, the Singapore Financial Markets Association, worked closely with the local FX committee, as well as with a number of FX committees in other major centres, during the financial markets crisis in Malaysia. This provided the opportunity for ACI to take a lead role in issuing standard settlement procedures to help smooth any potential problems following the imposition of exchange controls in Malaysia.
More recently, ACI submitted a Y2K settlements proposal to the central banks and regulatory bodies of all 59 of its member countries, as well as to each of its 59 ACI presidents, the European Central Bank, Swift, Isma, Isda and Euribor. The recommendations are aimed at reducing settlement risk associated with unforeseen Y2K problems.
The measures, which recommend that all central banks declare December 31, 1999 and January 3-4, 2000 as non-settlement dates, are designed to reduce transaction volumes and payments in the first week of 2000. This effectively means that no payments can be executed during these days. “Market conventions recommend that in cases like this, contracts maturing on December 31, 1999 should be settled one day earlier and contracts maturing on January 3-4, 2000 should be settled on January 5. This will help to prevent disruptions in managing the day to day liquidity positions of the banks,” says ACI in a statement.
“These are two examples that will hopefully attract attention from the regulators and the market, because we want to place more emphasis on our unique position to step into this kind of role,” Ligthart adds.
A couple of years ago, ACI took a major strategic step-it decided to run its organisation like a business. A Business Development Steering Committee was formed under the chairmanship of past president, David Clark, who is currently the treasurer of Bankgesellschaft Berlin in London. At the Forex 96 world congress that took place in Frankfurt, ACI unveiled the new Business Plan and announced it would hire a full-time staff member to lead the effort.
“Until then, the members had done a very good job of running the organisation, but we had to realise that we now lived in a different world,” says Ligthart.
At its foundation, the Business Plan was designed to address inherent weaknesses within ACI’s structure, calling for the name change, increased educational efforts and improved marketing of the ACI branding, among other aspects.
The following year, at the Forex 97 conference in Toronto, ACI appointed Bill Hahn as its new business manager. Hahn joined from the London branch of Nikko Europe, where he was a managing director.
ACI has since revamped its previously cumbersome internal structure, last year announcing sweeping changes to its Council and Executive Committee at the Forex 98 event held in Geneva, in line with the actions called for in the Business Plan.
Later that year, at the Asia Forex 98 conference in Sydney, ACI unveiled plans to create an International Code of Conduct, which will incorporate the ACI’s Code, as well as those of its various national members. Ligthart says ACI has embarked upon this venture with the aid of a number of central bank-related FX committees, including those of France, Japan, the UK, the US and Singapore, to create a market standard for the industry.
The first draft of the Code should be available by the end of this year and Ligthart says ACI is hoping to launch it at next year’s international congress, Paris 2000. “It will be ACI’s contribution to the millennium celebrations!” he proclaims.
Licence to Deal
In addition to the International Code of Conduct, Ligthart says there is another dream that he would like to see fulfilled-a Licence to Deal certificate that would be the industry standard for trading.
ACI has made great strides in terms of its efforts in education. ACI formalised its commitment to education when it created the ACI Institute in 1994, which conducted the training and testing for the ACI Diploma, the benchmark qualification upon which ACI is pinning its hopes for dealer accreditation.
Late last year, however, ACI restructured the education division and brought the Institute back into the ACI fold under a newly dubbed Board of Education, led by chairman Claude Schon of Banque Interationale a Luxembourg in Luxembourg and board member Ann McGoff, who is based in Kent, UK.
“We want the ‘licence to deal’ to be like the securities industry exam. We want it to be recognised by all the regulators and market players in all the trading centres,” says Ligthart. “The major difference, however, will be that the qualification is available on a global basis, so the test is the same in every centre.”
Ligthart says the timeframe for achieving this goal is admittedly a much longer prospect, but notes that accreditation has already become the norm in Australia, from where ACI’s new vice president Mike Eastaway hails. Eastaway, who works for the National Australia Bank in Sydney, has himself made global dealer accreditation one of his primary agendas during his three-year term in office. Eastaway says that as much as 90 per cent of the Australian trading banks recommend that FX traders possess the Australian Dealer Accreditation Certificate, developed by ACI Australia and the Australian Financial Markets Association, as a prerequisite for trading.
ACI Suisse is also moving quickly in this direction. All members of the national organisation are now required to pass the ACI Dealing Certificate, which is the most basic of the three exam levels. There is a complementary “licence to settle” for the back office, called the ACI Settlements Certificate. The certificates require dealers to pass the Introduction to the FX and Money Markets, Codes of Conduct and Market Practice, or Back Office Operations and Risk Controls in the Dealing Room exams.
After dealers pass these subjects, they can then go on to obtain the ACI Diploma, which is designed for traders with several years of experience.
Ligthart says ACI is in favour of the move by ACI Suisse, and hopes that over time, all members will have similar requirements.
But, with the consolidation of spot trading that has fundamentally changed the marketplace, what is ACI doing about re-educating the old spot dollar/mark dealer? Ligthart points out that the ACI Diploma itself trains dealers in areas other than spot FX. “Once a dealer passes the ACI Diploma, he or she should have gained a broad knowledge of the markets and therefore be able to easily move into other areas,” he says.
Ligthart commends the Singapore Financial Markets Association for a re-education programme it developed with a local university, which is made possible by the active sponsorship of the Monetary Authority of Singapore.
Furthermore, says Ligthart, ACI changed its name to reflect the wider financial markets. But just how ACI is going to market itself as more than just an FX organisation is one of the challenges Ligthart and his colleagues face.
He admits ACI has traditionally been poor in marketing itself to the major trading banks. “If you attend our conferences, you will see that we attract an impressive list of high-profile speakers, and yet we are not recognised by the press and the markets as a real organisation-it can be very frustrating,” he says.
“We would like more participation from the big banks. If we can reach the regulators-by getting them to accept our International Code of Conduct and ACI Dealing Certificates as the market standard, those banks won’t have an option. As a trade association, we can set these benchmarks and if the regulators accept them, then any bank should be interested in ACI. And if we don’t look after ourselves-somebody else will do it for us, which would be much worse.”
“It’s a chicken and egg situation-we’re going to be the chicken-we want a situation where we cannot be avoided anymore,” he adds.
Ligthart does credit the banks however, as it is with their cooperation that ACI’s roughly 24,000 members (comprised of 15,000 international members, 9,000 national members and 400 individuals) can spend time working for ACI, while remaining in employ.
ACI draws its resources from membership fees and sponsorship-such as events, seminars or through exhibition space at the national and international conferences.
ACI is also looking for alternative ways of funding its activities-such as introducing advertising into its internal newsletter, ACI Briefing.
New York Meeting
In April, ACI gave birth to an independent committee-the Strategic Planning Group-at is most recent Council and Executive Committee meetings, which were held in New York. The Strategic Planning Group takes over from the former Business Development Committee, which was dissolved last month, to address many of these issues, says Ligthart.
At the New York meeting, ACI’s vice president Eastaway was named to oversee the group. Committee members will be appointed by Ligthart and Eastaway, with recommendations by the Executive Committee. Ligthart is keen to have one of the members represent the younger dealers, in an effort to appeal to this evasive sector of the marketplace.
Eastaway is due to give his first report on the group’s activities at the Forex 99 event in Milan held at the beginning of this month.
“All of these activities are aimed at becoming the representatives for our markets to the media, regulators and banks,” says Eastaway.