Foreign Exchange Global Code to be adopted by RBNZ and FMA

Foreign exchange global code to be adopted by RBNZ and FMA

The Foreign Exchange (FX) Global Code (Global Code) is a set of global principles of good practice in the foreign exchange market, developed to provide a common set of guidelines to promote the integrity and effective functioning of the wholesale foreign exchange market. It was developed by a partnership between central banks and Market Participants from 16 jurisdictions around the globe.

Read the Global Code of Conduct for the Foreign Exchange Market

Its purpose is to promote a robust, fair, liquid, open, and appropriately transparent market in which a diverse set of Market Participants operate. Supported by resilient infrastructure, they are able to confidently and effectively transact at competitive prices that reflect available market information, and in a manner, that conforms to acceptable standards of behaviour.

On the central bank side, the Foreign Exchange Working Group (FXWG) was established in July 2015 to facilitate the creation of the Global Code and to promote its adoption. It operates under the auspices of the Markets Committee, which is composed of senior officials responsible for market operations in 21 central banks representing the largest currency areas, chaired by Guy Debelle (Deputy Governor, Reserve Bank of Australia).

On the private sector side, the FXWG formed a Market Participants Group (MPG), chaired by David Puth, Chief Executive Officer of CLS Bank International, to help coordinate across the regional foreign exchange committees (FXCs) and representatives of the FX Market in other regions. This is in order to engage a broad and diverse set of Market Participants in the process of developing and promoting the Global Code.

The Global FX Code is organised around six leading principles:

  1. Ethics: Market Participants are expected to behave in an ethical and professional manner to promote the fairness and integrity of the FX Market.
  2. Governance: Market Participants are expected to have a sound and effective governance framework to provide for clear responsibility for and comprehensive oversight of their FX Market activity and to promote responsible engagement in the FX Market.
  3. Execution: Market Participants are expected to exercise care when negotiating and executing transactions in order to promote a robust, fair, open, liquid, and appropriately transparent FX Market.
  4. Information Sharing: Market Participants are expected to be clear and accurate in their communications and to protect Confidential Information, so as to promote effective communication that supports a robust, fair, open, liquid, and appropriately transparent FX Market.
  5. Risk Management and Compliance: Market Participants are expected to promote and maintain a robust control and compliance environment to effectively identify, manage, and report on the risks associated with their engagement in the FX Market.
  6. Confirmation and Settlement Processes: Market Participants are expected to put in place robust, efficient, transparent, and risk-mitigating post-trade processes to promote the predictable, smooth, and timely settlement of transactions in the FX Market.

The Global Code will be periodically reviewed and is expected to evolve over time in a similarly collaborative manner.

TINZ applauds the RBNZ and FMA for their international collaboration to design a code based on international best practice for foreign exchange activities.

Now, through TINZ’s Financial Integrity System Assessment (FISA), financial organisations will become more aware of the impact of bribery and corruption on financial markets.

There is more work to do, however, if the sector is to be protected from bribery and corruption which is likely to make up at least 35% of illicit transactions. Based on the experience of the global financial crisis, an important feature of the code should be its whistle-blowing process, backed up with a strong policy of protective disclosure.

After the FISA, the RBNZ and FMA will be positioned to incorporate provisions to prevent bribery and corruption, as part of the implementation of the 6 elements that make up the Global FX Code.


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