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FX global code registers to be live within months


Joel Clark
Published on:

The newly formed global FX committee will issue guidelines and maintain an index of registers, but they will be run by the private sector.

Public registers to identify those institutions adhering to the newly launched FX global code could become operational as soon as July, as pressure mounts on market participants to demonstrate their commitment to the 55 principles that were unveiled today.

Speaking at a press conference at the Bank of England in London, David Puth, chief executive of industry utility CLS, suggested his firm would look to set up a public register, which is one of the initiatives designed to promote adherence to the code. The 81-page document concludes with a short statement of commitment that all institutions active in FX are now being encouraged to sign, and registers would publicly name those that have done so.

“We will probably file to be a public register and be ready to do so at the beginning of July, or sometime early in the third quarter, but you should expect to see a broad set of market participants ready to sign the statement of commitment at that time,” said Puth, who chaired a broad-based panel of industry practitioners that has supported the development of the code over the last two years.


The Global Foreign Exchange Committee (GFXC), which met for the first time on Wednesday and will now take the lead in monitoring and maintaining the code, is expected to publish guidelines on what would constitute an effective register and will also maintain an index of registers, but it will be left to private-sector institutions such as CLS to operate them. The GFXC will have public- and private-sector participants and is chaired by Chris Salmon, executive director for markets at the Bank of England, with Puth serving as vice-chair.

David Puth 2016-160x186

David Puth, CLS

“Public registers will come in a number of different forms,” said Puth. “We feel it’s our responsibility as a global FX committee to create an index of those registers, and there are some criteria about what the register does.”

Beyond supporting the development of public registers, one of GFXC’s first priorities will be to collate and act on feedback on last-look practices in the FX market. In principle 17, the global code requires greater transparency and disclosure on the part of market participants that exercise the right to accept or reject trade requests against a quoted price during the last-look window, but it resisted calls from some lobbyists to go further on the basis that last look can be used to manage risk.

Barclays was fined $150 million by the New York State Department of Financial Services in 2015 for using last look to automatically reject client orders that would be unprofitable for the bank, prompting calls to ban the practice altogether. Recognising the diversity of opinion that exists, the GFXC today launched a consultation on trading activity during the last-look window to assess the positive and negative impact of the practice and determine if further modifications to the language used in the code may be necessary.

“We have had quite a diverse set of views, particularly around the issue of trading in the last-look window,” said Guy Debelle, deputy governor of the Reserve Bank of Australia and chair of the FX Working Group that led the development of the code. “This is one area where the market right at the moment is evolving in terms of its practice, so it demonstrates the fact that we need to make sure the code remains up-to-date.”

Individual jurisdictions

While the code has been developed by a global committee of central bankers and market practitioners, it will be left to individual jurisdictions to determine what further regulatory measures may be necessary to ensure industry adoption.

In a statement today, the UK Financial Conduct Authority reiterated its intention to link the principles to the UK Senior Managers and Certification Regime, expecting certified individuals to take responsibility for and demonstrate their own adherence.

Questioned on whether or not US regulators might look to adopt a similar approach for participants in New York, Simon Potter, head of the markets group at the Federal Reserve Bank of New York, declined to speak for other agencies but suggested best practices had worked well on their own in the past.

“I think that across the globe you will see different approaches depending on the regulatory environment and how used they are to using best practices,” said Potter. “In the US, best practices have proved very helpful for us, and I have a strong expectation that in the New York market, these best practices will be very effective.”

The GFXC plans to conduct an annual survey to assess the level of awareness and adoption of the code across the industry, with the first such exercise slated for later this year.