The publication today of the first part of the Bank for International Settlements (BIS) Global FX Code (the ‘Code’) is a significant milestone. It represents a key step in the development of principles governing trading practices in FX markets worldwide. The FCA welcomes the work by central banks, in coordination with major industry participants, to raise standards in these important markets through the Code.
We welcome in particular the recognition that even where a dealer sets out that it is acting as principal, it still has important responsibilities to its clients when using its discretion on their behalf.
In the UK, many parts of firms' FX activities are already subject to specific and demanding regulatory requirements, such as the client order handling and best execution standards in MIFID, and the rules against market manipulation and abuse. The FCA has also worked with firms to ensure a number of other conduct risks identified as part of the FX remediation work - initiated following FCA enforcement action against a number of major banks in this sector - are addressed. In addition to firms’ ongoing obligation to comply with these regulatory requirements, the FCA expects firms and responsible senior managers to ensure their staff satisfy appropriate standards of market practice. The Code as it continues to develop will make an important contribution to such standards.