BIS releases first phase of Global Forex Code of Conduct

BIS releases first phase of Global Forex Code of Conduct

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Forex Global Code

The Bank for International Settlements (BIS) issued on Thursday the first part of the Global Code of Conduct for the Foreign Exchange Market, which aims to promote integrity and strengthen the code of conduct standards by introducing a global set of principles in forex markets.

The published document defines the Code as “a set of global principles of good practice in the foreign exchange market“. The Code reinforces six main principals, which are expected to apply to all forex market participants, including retail foreign exchange brokers and electronic trading platforms. These are: ethics, governance, information sharing, execution, risk management and compliance, and confirmation and settlement. The Code will be voluntarily adhered by market participants, rather than imposing legal or regulatory obligations on its own or being a supplement to local laws. The BIS noted that for some, it might take take to fully adopt the principles of the Code into their internal practices.

“The motivation for this work derives 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 document read.

The second phase, or the complete Code, will be release in May 2017, but it will evolve and be changed over time to reflect the evolving nature of the forex market itself.  It is being developed by central banks and market participants from 16 jurisdictions.

“In a globalised world, the foreign exchange market is one of the most vital parts of the financial plumbing,” said Guy, chairman of the Foreign Exchange Working Group (FXWG). “One of the guiding principles underpinning our work is that the Code should promote a robust, fair, liquid, open, and transparent market,” he added.

The FXWG was set up in July last year and includes as members the central banks of Australia, Brazil, Canada, China, France, Hong Kong, India, Japan, Korea, Mexico, Singapore, Sweden, Switzerland, the UK, the Federal Reserve Bank of New York, and the European Central Bank (ECB).

We expect market participants will evolve their practices to be consistent with the principles contained in the Global Code in order to promote a robust, fair, liquid, open, and transparent market underpinned by high ethical standards, members of the Economic Consultative Committee (ECC) and the Global Economy Meeting (GEM), said in a statement, published on the BIS website.

Meanwhile, the UK’s Financial Conduct Authority (FCA) issued on Thursday a notice on the matter, referring to the Code as “a significant milestone”, since “it represents a key step in the development of principles governing trading practices in forex markets worldwide”.

Switzerland-based BIS, set up in 1930, is the world’s oldest international financial organization, with 60 member central banks, representing countries from around the world that together make up about 95% of world GDP.

To see the complete Code and its principles, please click here.

Source: BIS

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