Release of Global FX Code - Market participants have to demonstrate their adherence to the Code

The Foreign Exchange Working Group (FXWG) under the Bank for International Settlements has published the Global Code of Conduct for the wholesale FX market (the Code).

The Code will become binding and applies to all market participants that engage in the FX markets, including sell-side and buy-side entities, non-bank liquidity providers, operators of e-trading platforms and other entities providing brokerage, execution and settlement services.

The FCA has welcomed the Code and stated that it expects firms, Senior Managers, certified individuals and other relevant persons to take responsibility for and be able to demonstrate their own adherence with standards of market conduct.

Market participants, particularly systemically significant sell-side institutions, should seek to evidence that their policies, processes and control frameworks adhere to the Principles in the Code. Firms should enhance their control frameworks in accordance with the Principles.

A first step involves performing a control framework review and gap analysis by assessing existing control frameworks, policies and processes against the Principles. Firms should also consider the Code’s overlaps with existing regulations, including FCA COBS, SYSC, MiFID II and ICO’s DPA 1998. The FXWG has estimated that most firms will require 6-12 months to review and adjust their practices to align with the Principles.

Principles to which firms must adhere are covering topics related to: ethics, governance, best execution, confidentiality of information sharing, risk and compliance, confirmation and settlement.

Deloitte can assist you with control framework review and gap analysis by assessing existing control frameworks, policies and processes against the Principles of the Code.

Should you be interested in any of our solutions, including organising a workshop with our team, please do not hesitate to contact us.