The final Global FX Code has been released on 25th May 2017. ATEL has endorsed it.

The Foreign Exchange Working Group (FXWG) was established by the BIS Governors to strengthen code of conduct standards and principles in foreign exchange markets (https://www.bis.org/press/p160526.htm).

The motivation for this work derived from the desire to promote integrity and restore confidence in the wholesale foreign exchange market (FX market) in light of the recent cases of misconduct.

The Global FX Code (Global Code) is intended to become an integral part of the FX market globally, and articulate the good practices with which Market Participants and their counterparties are expected to conduct their business. For the Global Code to have the desired effect of promoting a robust, fair, liquid, open, and appropriately transparent FX market, it needed to be embraced and adopted by a wide range of Market Participants across various segments of the market. This would be bolstered if Market Participants are able to recognize benefits from embedding the standards of the Global Code in their business practices and demonstrating to others that they have done so.

The idea of a code of good practice setting out appropriate market behavior and standards is not new: such codes have long existed in financial markets, including FX, as the basis for trade. Codes can serve an important role in well-functioning financial markets, by enabling participants to affirm norms of appropriate behavior that go beyond those minimum standards that are established by local law and regulation. The Global Code builds on the existing set of best practices developed and endorsed by the various regional Foreign Exchange Committees (FXCs), such that all sections of the global FX market are able to confidently and effectively transact with a shared understanding of acceptable standards of behavior. It is however important for all Market Participants to be open and transparent about how they adhere to the Global Code. This should provide, in our view, a positive signal of their commitment to adopt and promote good market practices, and also facilitate market discipline.

Over the coming year the FXWG will work closely with a wide range of Market Participants and relevant Associations to facilitate the development of market-based mechanisms to embed the Global Code within firms’ culture and practices, as well as to monitor and demonstrate adherence to the Global Code as appropriate. This will build upon existing work and initiatives, and draw upon examples from outside the FX market, with the aim of ensuring that the Global Code becomes part of the fabric of the FX market.

The Global Code will not impose legal or regulatory obligations on Market Participants, nor will it supplant existing regulatory standards or expectations. There is already a substantial body of law and regulation that applies to the FX activities of many Market Participants, and this varies significantly across jurisdictions. This variation, coupled with the diverse nature of FX markets globally, means that a “one size fits all” approach to adherence would not be appropriate. However, adherence will need to strike the right balance between being adequately flexible to respect the existing diversity across different markets, and maintaining consistency with regard to what is a global initiative.

The BIS’ central banks and all European Central banks member of the European System of Central banks as well as several FX Committees have issued a press release of support to the Code. 

Therefore, ATEL welcomes and strongly supports the launch of the FX Global Code (Code) for the wholesale foreign exchange (FX) market. This initiative will strengthen the integrity and effectiveness of the FX market. We support adherence to the Code by the FX market and intend to promote the Code to our members, by encouraging them to evolve their institutions’ FX practices to be consistent with the principles in the Code.

Fran?ois Masquelier, Chairman of ATEL