The FX Global Code was developed by what is described as a partnership between central banks and Market Participants from 16 jurisdictions around the globe.
The purpose of the Global Code is to promote a robust, fair, liquid, open, and appropriately transparent market in which a diverse set of Market Participants, supported by resilient infrastructure, are able to confidently and effectively transact at competitive prices that reflect available market information and in a manner that conforms to acceptable standards of behaviour.
As from 25 May 2017, the FX Global Code supersedes and substantively updates existing guidance for UK participants in FX markets provided by the Non-Investment Products (NIPs) Code.
The Guide to the Code
The Code was created with the principle of proportionality in mind - namely the concept that not all principles will apply in the same way to all market participants, and that market participants will therefore apply the Code in different ways. Our guide to the Code has been produced to assist members of the IA in understanding how the Code applies to them as investment managers. It provides a guide to each of the Code's Principles in turn, as well as a brief gap analysis in terms of how the Code's principles apply in relation to existing standards or regulation. Members should still undertake their own assessment of the Code to determine how best to apply the Principles in line with their activities in FX markets.
Our guide to signing up is produced to assist members of the IA in understanding how to sign up, and to consider changes and developments to the Code over time. It draws upon the Global Foreign Exchange Committee’s (GFXC) own document about the standardised Statement of Commitment. The GFXC is the body tasked with the ongoing maintenance of the Global Code. In the UK, London Foreign Exchange Joint Standing Committee (FXJSC), chaired by the Bank of England is a forum for discussion concerning the wholesale foreign exchange market, including the Global Code.
The practice of Last Look – whereby a Market Participant receiving a trade request has a final opportunity to accept or reject the request against its quoted price – has received considerable buyside attention. Concerns have been voiced that the use of Last Look provides dealers with a significant information advantage and disadvantages client execution. The Investment Association has therefore developed a position paper on the use of Last Look, setting out recommendations for how concerns may be best addressed by liquidity providers and venues.