30 January 2020

BIS: Markets Committee calls for wider adoption of global code of conduct for foreign exchange markets

The BIS Markets Committee has called for more participants in the foreign exchange (FX) market to adopt the FX Global Code. Launched in 2017, the Code is a set of good market practices for the global FX market, with its turnover of more than $6.6 trillion a day.

Markets Committee Chair Jacqueline Loh said that a significant and growing number of market participants have posted Statements of Commitment to the Code. She noted, however, that adoption has lagged for some important market segments, particularly large buy-side participants, such as asset management firms.

"For the Code to be successful, it is vital that market participants from all segments recognise that adherence to the Code is an implicit part of their participation in the global FX market," Loh wrote in an open letter to Guy Debelle, Chair of the Global Foreign Exchange Committee (GFXC), a global association of FX committees that includes central banks as well as private sector participants.

The letter summarises the key takeaways of an assessment of the Code's effectiveness, as conducted by the Markets Committee at the request of Governors of the BIS Global Economy Meeting (GEM). The Markets Committee recommended exploring additional ways to encourage adoption of the Code in buy-side firms.

The Markets Committee also urged the GFXC to strengthen the Code by improving the transparency and disclosure of trading practices on anonymous review of the Code, in 2020.

GEM Chair Mark Carney said: "Since the Code's launch, a lot has been accomplished. It has become a benchmark for FX-related issues and has helped to improve standards of behaviour in FX markets. The GEM Governors look forward to the GFXC's review, which will help ensure the Code remains relevant and dynamic."

The Markets Committee, located at the Bank for International Settlements, is a forum for senior central bank officials to jointly monitor developments in financial markets and assess their implications for market functioning and the market operations of central banks.

Full letter on BIS

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