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FX: Market struggles to interpret global code

The Global Foreign Exchange Committee (GFXC) is trumpeting the fact more than 100 market participants have made statements of commitment to the FX global code, but these organizations face obstacles to maintain adherence, according to consultants.


Adherence to policy in the FX market is always a hot topic, but even more so with the approaching end-of-May deadline for the code.

Market participants need to understand that stating their commitment to the code is only the beginning of the process – and that keeping it up might be trickier than they imagined.

For example, the first principle of the code states that “market participants are expected to behave in an ethical and professional manner to promote the fairness and integrity of the FX market”.

Richard Longmore,

Yet different societies have different ethical practices, and ethics also evolve over time, so what might be deemed fully ethical now might not be deemed so 10 years down the line, says Richard Longmore, co-founder of Finoesis, a capital markets consultancy.

In effect, market participants are subject to a permanent look-back by regulators through the prism of an evolving set of ethics, he adds.

“This places a heavy burden on senior management in trading, sales and compliance to ensure that there is a constant adherence to a changing landscape at a time when there has been significant delayering – typically at the higher end of the management experience scale – and the consequences of failure are exponentially higher,” says Longmore.