The first phase of the global code of conduct for the foreign exchange (FX) market and principles for adherence to the new standards were released Thursday by the Foreign Exchange Working Group (FXWG).
Thee code sets out principles for FX market participants in the areas of ethics, trade execution, information sharing, confirmation and settlement. It is being developed to enhance the integrity, and improve the functioning of, FX markets. The FXWG aims to have the complete code developed by May 2017.
“In a globalized world, the foreign exchange market is one of the most vital parts of the financial plumbing,” said Guy Debelle, chairman of the working group and assistant governor of the Reserve Bank of Australia, in a statement. “One of the guiding principles underpinning our work is that the code should promote a robust, fair, liquid, open, and transparent market.”
In a joint statement, the release was welcomed by a collection of regional FX committees from the world’s major financial centres, including committees from Canada, New York, London, Hong Kong, Singapore, Tokyo, and Australia, along with Europe’s committee. “This is a significant initiative and today marks an important milestone. We will continue our active involvement in the development of the global code over the next year and expect to endorse the global code,” they said in a statement.
Additionally, the members of the FX committees said that they expect financial firms to bring their practices in line with the principles set out in the global code. “To be fully effective, the global code must become an integral part of the fabric of the wholesale foreign exchange market. We are committed to achieving this, working alongside central banks and other market participants around the globe, to promote the integrity and effective functioning of the foreign exchange market,” they said.
The release was also lauded by a group of central bank governors from around the world, who also stressed that they expect firms to follow the principles of the proposed code, and pledging to adhere to the principles when they trade in global FX markets, too.