BIS renews vow to FX Global Code amid last year’s update

Rick Steves

The Bank for International Settlements has renewed its commitment to the FX Global Code after reviewing its content, as updated in July 2021. 

Acknowledging that the Code represents a set of principles generally recognised as good practice in the wholesale foreign exchange market, the international financial institution confirmed that it acts as a market participant as defined by the Code, and is committed to conducting its FX market activities according to it.

Since the launch of the FX Global Code, BIS said it has taken appropriate steps, based on the size and complexity of its activities, and the nature of its engagement in the FX market, to align its activities with the principles outlined in the Code.

GFXC updated 20% of FX Global Code

It was in July 2021 that the Global Foreign Exchange Committee (GFXC) announced it has updated the FX Global Code, published new templates for disclosures, and a guidance paper on pre-hedging.

Following an extensive review of the FX Global Code, the committee has updated the principles of good practice in FX in several key areas. The GFXC has updated eleven of the Code’s fifty-five principles and strengthened the Code’s guidance on anonymous trading, algorithmic trading and transaction cost analysis, disclosures and settlement risk.

The Global Code does not impose legal or regulatory obligations on Market Participants, nor does it substitute for regulation, but rather it is intended to serve as a supplement to any and all local laws, rules and regulations by identifying global good practices and processes.

The Code aims to provide a common set of guidelines to promote the integrity and effective functioning of the wholesale foreign exchange market. It was developed by a partnership between central banks and Market Participants from 20 jurisdictions around the globe.

Its purpose is to promote a robust, fair, liquid, open, and appropriately transparent market so that market participants can confidently and effectively transact at competitive prices that reflect available market information and in a manner that conforms to acceptable standards of behaviour.

The FX Global Code has been adhered to by over 1,100 entities, who signed a Statement of Commitment to the code’s principles. The update is also meant to encourage market participants to consider renewing their Statements of Commitment.

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