Working group to strengthen code of conduct standards and principles in foreign exchange markets has commenced work

24 July 2015

Press release

The Foreign Exchange Working Group (FXWG), announced by BIS Governors in May to strengthen code of conduct standards and principles in foreign exchange markets, has now been established.

The group, which operates under the auspices of the Markets Committee, is headed by Guy Debelle (Reserve Bank of Australia), Chairman of the Markets Committee. The group's membership covers major financial centres in both advanced and emerging market economies.

The main objectives of the FXWG's work are to facilitate the establishment of a single global code of conduct standards and principles and to promote greater adherence to these standards and principles. The Code is intended to cover all parts of the global wholesale FX market, with appropriate consideration to local circumstances. This work builds upon that of the various regional foreign exchange committees (FXCs) agreed at the latest global FXC meeting1 and puts a more direct focus on the development of a single global code for the FX market, engaging a broader set of regions in the process. The work will provide input into the wider official effort on market conduct coordinated by the Financial Stability Board.

To support the FXWG, a Market Participants Group (MPG) is being established, drawing on participants from the sell side and buy side of the market as well as FX infrastructure providers. This group also has a wide and diverse geographical scope. The FXWG and the MPG will work closely with the FXCs and reach out to jurisdictions beyond those represented on the Markets Committee. The MPG will be chaired by David Puth, Chief Executive Officer of CLS.

The FXWG has just held its first meeting in Singapore. The work is proceeding in two parts. One workstream is drafting the new single global code by harmonising common elements of the existing FX codes as well as drafting new principles for those areas not adequately covered in existing codes, with input from the MPG. The other workstream will develop proposals to promote and incentivise adherence to the new single global code.

Guy Debelle said today: "A single, global common code of conduct is a necessary goal for the FX industry. The Code will be principles-based ‒ rather than rules-based ‒ and will provide guidance on what is, as well as what is not, appropriate behaviour for practitioners in the FX market."

Progress towards the development of the Code will be shared publicly as the work takes place. The target date for finalisation of the Code, as well as of the proposals to ensure greater adherence, is May 2017.

About the Markets Committee

The Markets Committee, located at the Bank for International Settlements, is a forum for senior central bank officials to jointly monitor developments in financial markets and assess their implications for the market operations of central banks.

The Committee comprises senior officials responsible for market operations at 21 central banks: Reserve Bank of Australia, National Bank of Belgium, Central Bank of Brazil, Bank of Canada, People's Bank of China, European Central Bank, Bank of France, Deutsche Bundesbank, Hong Kong Monetary Authority, Reserve Bank of India, Bank of Italy, Bank of Japan, Bank of Korea, Bank of Mexico, Netherlands Bank, Monetary Authority of Singapore, Bank of Spain, Sveriges Riksbank, Swiss National Bank, Bank of England and Federal Reserve Bank of New York.