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Global code of conduct in FX markets to be ready by 2017: officials

Xinhua, September 10, 2015 Adjust font size:

The creation of a new global code of conduct for participants in the foreign exchange markets will be ready for use by May, 2017, senior officials involved in its creation revealed Wednesday.

The officials are working through the Markets Committee at the Bank for International Settlements (BIS), to strengthen code of conduct standards and principles in foreign exchange markets, following a series of corruption scandals. It would mean the scrapping six current codes in force.

Among the most recent and most high-profile of the scandals was the British bank Barclays which in May announced that it had agreed to pay a fine of 1.533 billion pounds (2.4 billion U.S. dollars) to British and American regulators for the manipulation of foreign exchange and currency.

In addition, three other banks, JPMorgan, Citigroup and RBS, agreed to plead guilty to U.S. criminal charges, according to the U.S. Department of Justice.

Guy Debelle, assistant governor of the Reserve Bank of Australia and head of the BIS Markets Committee, told journalists at a press briefing hosted by the UK central bank, the Bank of England (BOE), that BIS had established a Foreign Exchange Working Group (FXWG) whose work program was organised around two workstreams.

The first, led by Simon Potter head of the markets group at the New York Federal Reserve, will draft a new code, while the second, led by Chris Salmon executive director of markets at the BOE, will develop proposals to promote adherence to the new code.

The FXWG is supported by the Market Participants Group (MPG), which is chaired by David Puth, CEO of CLS Group Holdings. The MPG has its first meeting in London on Tuesday.

Debelle said, "What we are being tasked with is coming up with this code and trying to get mechanisms to get people to follow it."

However, the adherence mechanisms had not been worked out yet, said Debelle.

Salmon, who is developing the adherence systems, said, that the UK government had decided to take action against spot-FX trading infringements in the summer through its Fair and Effective Markets Review (FEMR), set within the context of this to-be-agreed global code.

He added, "This group here does not have any legislative powers or responsibilities. We have been asked to develop a global code and think about mechanisms to maximise adherence to that code, and it is for different governments and regimes to agree what else they want to do around that."

Debelle said that the code would be released in chunks in the run-up to May 2017, for reaction.

"The aim is to have a single code out there in May 2017 along with proposals around the adherence mechanisms. We will have one code across the global market and across all aspects of the market," said Debelle. Endit