20 October, AtoZForex.com, Lagos – Several regulators around the world have been taking steps to fortify their grip on FX market activities. Prompted by the worldwide investigations by various regulators into different forms of misconduct in their foreign exchange markets.
In October 2014, the South African Reserve Bank (SARB) and the Financial Services Board (FSB) launched a review of the foreign exchange trading practices amongst authorized dealers in the South African foreign exchange market.
This review was intended to confirm and where appropriate, strengthen the level of adherence to best practice standards in foreign exchange dealings. They established a Foreign Exchange Review Committee (FXRC) headed by Mr J Cross, former Senior Deputy Governor of the SARB.
SARB comments on the review
The SARB stated that: “Unlike in many other jurisdictions, this review was not informed by whistle-blowing or allegations of any indications of widespread misconduct or malpractice in the South African foreign exchange market. It was a proactive step by South African authorities intended to confirm and where appropriate, strengthen the level of adherence to best practice standards in foreign exchange dealing.
Commenting further on the purpose of the review, the SARB communicated that: “It also aimed at minimizing the risk of manipulation of benchmarks and sharing of confidential client information, and at enhancing the transparency, efficiency and integrity of the South African foreign exchange market.”
South Africa Forex Problems in detail
As stated in the report, key findings of the FXRC include that:
- For the period under review, the FXRC could not find evidence of widespread malpractice or serious misconduct in the South African foreign exchange market. The FXRC, however, found that there was scope for improvement in overall market conduct.
- Most authorized dealers have acceptable arrangements and structures in place as well as whistle-blowing policies and complaints processes for clients, which, however, in some instances can benefit from updates and refinements.
- The FXRC found that some authorized Dealers experienced problems with retrieving records while others did not provide ongoing training to their staff to keep abreast of changes in regulatory frameworks and ongoing professional requirements.
Benefits for FX dealing standards in South Africa
Further benefits of the program for standards for FX dealing in South Africa includes the fact that the market would benefit from a unified Code of Conduct for the Over-the-Counter financial markets. This led to the draft of a Code of Conduct, in consultation with market participants, alongside the ongoing review.
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