Amid concerns about a possible foreign exchange (FX) trading scandal at some of the world’s biggest banks, the Financial Stability Board (FSB) says that it will be looking at FX benchmarks as part of its efforts to review financial benchmarks in the wake of the LIBOR scandal.
The FSB said today that it has decided to incorporate an assessment of FX benchmarks into its ongoing program of financial benchmark analysis, which was launched in response to the LIBOR scandal. The move comes in response to the fact that “a number of concerns have been raised about the integrity of foreign exchange (FX) rate benchmarks”, the FSB notes.
As a result, a new FX benchmarks group has been established at the FSB to undertake a review of FX benchmarks and to analyze market practices “in relation to their use and the functioning of the FX market”.
The new group will be chaired by Guy Debelle, assistant governor, financial markets, at the Reserve Bank of Australia; and Paul Fisher, executive director for markets at the Bank of England. The group is planning to produce recommendations for the next G20 summit in Brisbane in November.
The G20 commissioned the FSB to oversee work on necessary reforms to short-term interest rate benchmarks last year, to ensure that widely used benchmarks have adequate standards of governance, transparency and reliability.