UK BoE Signs FX Global Code, thus setting the beginning of the compliance process for the UK foreign exchange market’s participants. What is FX Global Code? How will the code affect the market?
7 February, AtoZForex – Mark today’s date on your calendar – it is the day when the process of compliance with global FX Code has kicked in in the UK. The central bank of the UK has inked the document that puts a beginning to this new development.
UK BoE Signs FX Global Code
The process is going to affect the way prime brokers, prime of primes, liquidity providers and brokerages operate. In fact, there are six other central banks in the European System of Central Banks (ESCB) that have issued statements of commitment to the FX Global Code. The banks appear strongly committed to promote and support the compliance to the FX Global Code.
The announcement from the UK Central Bank, the Bank of England (BoE) has emerged almost a month following the latest update in the document. The update covered a revision of the “last look” orders section. Some of the retail brokerages and prime of prime providers have already been complying with the FX Global Code during last year.
The deputy governor of the Bank of England, Dave Ramsden has commented:
“The Bank is strongly committed to supporting and promoting adherence to these codes. We are leading by example in publishing our Statements of Commitment today.”
Ensuring Full Compliance
The BoE ha also formally committed to the UK Money Markets Code and the global Precious Metals Code. The fact that the central bank has signed the document implies that the prime brokers are next to ink the document. Mr. Ramsden has stated:
“We expect regular counterparties to commit to embedding these principles of good practice in their market activities. Fair, transparent and robust markets, underpinned by high standards, benefit all participants.”
Prime brokerages’ clients will also need to sign the document, thus making sure that all the FX market participants confirm the compliance with the Code.
What is FX Global Code?
Back in May 2017, the Foreign Exchange Working Group (FXWG) has developed the FX Global Code. As a matter of fact, the FXWG was created by the Bank for International Settlements (BIS) back in 2015 and it consists of 16 major central banks.
According to the Global Foreign Exchange Committee official statement:
‘The FX Global Code (Global Code) is a set of global principles of good practice in the foreign exchange market. It is developed to provide a common set of guidelines to promote the integrity. Also, the Code will provideffective functioning of the wholesale Forex market.’
The Group has developed a code that comprises 55 principles that are related to certain issues across financial markets. Specifically, the FXWG explains that there are six primary principles that the FX Global Code is looking to improve:
- Information sharing
- Risk Management and Compliance
- Confirmation and settlement processes
What is the purpose of FX Global Code?
The purpose of the Global Code is to encourage robust, liquid, open and fair market. Additionally, the Code is aiming to ensure the resilient infrastructure of the market, where participants are able to confidently and effectively conduct business.
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