A long-awaited code of conduct for good practice in the global foreign exchange market is being unveiled on Thursday, and senior central bankers expect market participants to voluntarily enforce its provisions within less than a year.
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Guy Debelle, RBA |
“There will be a period of time for market participants to adjust their practices where necessary to be in line with the principles in the code,” says Guy Debelle, deputy governor of the Reserve Bank of Australia (RBA). “This period of time might potentially be as short as six months, but no more than 12 months for the vast majority of market participants.”
The drafting of the code began in 2015 when the Bank for International Settlements convened its FX Working Group (FXWG) of central bankers, chaired by Debelle, mandating it to establish a single set of principles that could be applied to the global FX market, replacing the many regional codes that had previously failed to prevent systemic market manipulation.
The benchmark-rigging scandal revealed in 2013 not only led to the firing of many senior traders and the paying of multi-billion dollar fines, but it also reduced trust and confidence in the FX market, with widespread criticism that banks had failed to enforce good conduct on their trading floors.