Regulators push for more take-up of the FX Global Code

On the 6th December, Andrew Hauser, Executive Director, Markets, at the Bank of England delivered a speech at London FX Hive Live in which he urged the buy-side to further buy into the FX Global Code. The Code has been adopted with vigour by banks and sell-side firms and it is clear that the regulators, led by the Bank of England, want the FX Global Code adopted by buy-side firms and all major FX market participants.

The Bank of England clearly sees adoption of the Code as contributing to meeting the requirements of the PRA’s and FCA’s regulators’ Senior Management and Certification Regime, which will be extended to asset managers in December 2019. Andrew Hauser commented that behaving in accordance with a recognised market code will help senior managers demonstrate that they are observing ‘proper standards of conduct’, a key requirement of the regime

Take-up of the Code, which was published in May 2017 and is voluntary, has been rapid. The number of ‘Statements of Commitment’ – which record organisations’ recognition of, and commitment to adopt the Code – has risen six-fold from 100 in April 2018 to 620 today and includes not only regulated financial markets firms but also a number of corporate treasury departments of major corporate FX market participants.

To encourage further take-up of the Code, the Code has been submitted to the FCA for formal recognition to become one of its industry codes for regulated firms undertaking unregulated activities within financial markets. The FCA published its consultation document in its Quarterly consultation paper No. 23 (CP18/39) with responses requested by 7th February 2019.

The Investment Association, too, is finalising a guide to assist its members to make their own assessment of the requirements of the Code and this should be published in the early part of this year.

It is becoming clear that take-up of the Code has the full backing and encouragement of the Bank of England, the PRA and FCA and major industry bodies representing FX market participants. It is seen as vital to the future integrity and effective functioning of the global FX market and it is likely that adoption of the Code will become a sine qua non for all major participants in the global FX market, to show that they embrace, adopt and adhere to the Code’s conduct standards, in the not too distant future.