What are the global norms?
What is its goal?
The Foreign Exchange Global Guidelines are a set of 55 global principles of foreign exchange (Forex) good market practices to promote the integrity and efficient functioning of wholesale foreign exchange markets.
The Code aims to promote a stable, fair, liquid, open and appropriately transparent market that supports the market through high ethical and professional standards and enables market participants to confidently and efficiently complete market transactions.
The most recent version of the guidelines was published in July 2021 and can be downloaded from the Committee on Global Foreign Exchange Markets website.
Who created the Global Code for Foreign Exchange, when and why?
The first full version of the standard was published on 25 May 2017 by the Foreign Exchange Working Group (FXWG), some of which were published the previous year. Established by the Bank for International Settlements in July 2015, FXWG comprises 16 regional central banks from around the world.
Currently, the guide is maintained and updated by the Global Foreign Exchange Markets Committee (GFXC).
The Global Foreign Exchange Committee was established in May 2017 as a forum bringing together central banks and private sector participants to promote stable, liquid, open and appropriately transparent foreign exchange markets.
The guidelines were developed in response to a series of high-profile cases of forex misconduct that came to light in 2013 and 2014, highlighting the fact that many existing regional forex codes of conduct were no longer effective due to negligence or non-compliance by some market participants.
Its main goal is to help rebuild trust and confidence in foreign exchange markets.
What are the main principles of global foreign exchange standards?
The code has 55 principles, with six main principles at its core: ethics, management, enforcement, information sharing, risk management and compliance, recognition and settlement processes To whom do the Foreign Exchange global standards apply?
These standards apply to all foreign exchange market participants, including seller and buyer entities, non-bank liquidity providers, forex electronic trading platform operators and other entities that provide brokerage, execution and settlement services.
In these standards, market participants refers to individuals or organizations meet the following conditions (regardless of its legal form why) : its normal business part is active in the currency markets, and by other market participants directly or indirectly engaged in the trading, or participate in aimed at according to one or more (e.g., derivatives) changes in the exchange gain or loss, whether can delivery or not delivery;
Operate facilities, systems, platforms or organizations through which Participants may execute transactions of the type described in the preceding paragraph;
To provide foreign exchange benchmark execution services;
Non-retail market participants in relevant jurisdictions.
According to the GFXC, the following types of individuals or organizations will normally participate in foreign exchange market activities as market participants.
Financial institutions central banks unless they are unable to perform their legal or policy functions;
Quasi-sovereign states and supranational institutions, except those which prevent them from fulfilling their organizational policy mandates;
Asset managers, sovereign wealth funds, hedge funds, pension funds and insurance companies;
The corporate finance department or the corporate finance center conducts external (non-group) transactions in its own name or on behalf of its parent company, subsidiary, branch, subsidiary or joint venture;
A family office for financial services;
Benchmark execution provider;
Non-bank liquidity providers;
Firms that run automated trading strategies (including high-frequency trading strategies) and/or provide algorithmic execution;
Brokers (including retail foreign exchange brokers);
An investment adviser;
Collection of business;
And similar intermediaries/agents;
Interact with remittance businesses, merchants and capital services companies in the wholesale foreign exchange market;
Electronic exchange trading platform;
Confirmation and settlement platform;
Any entity classified as a participant in the foreign exchange market in the relevant jurisdiction.
The following categories of individuals or organizations do not normally participate in forex market activities as market participants: pricing display platforms;
Interacting with retail customers remittance businesses, money changers and capital services companies;
Private bank clients trading in their individual capacity or through personal investment vehicles;
General retail public domain;
Does any relevant person or organization enforce global foreign exchange standards?
The standard is entirely voluntary, although signing up to it is usually a requirement for membership of a local foreign exchange market committee and an expectation of many central banks for their counterparts.
This code is intended to supplement local laws, regulations and rules and is not intended to impose legal or regulatory obligations on market participants, nor is it a substitute for regulation.
The signing of the Undertaking does not require the Agency to undertake any legal obligations, including the obligation to report to the GFXC, other than those imposed by the laws, rules and regulations applicable to the Agency and the foreign exchange markets in the jurisdiction in which the Agency does business.
Furthermore, unless explicitly required by the regulatory framework of the jurisdiction in which market participants reside, the decision to review the compliance of the Code is entirely in the hands of market participants.
Examples of the use of global foreign exchange standards GFXC has established a series of case studies and exemplifies the various considerations and implementation step standards for compliance by companies with this Code, with a focus on the concept of proportionality of standards.
The case studies are not binding or prescriptive, nor do they detail all the factors to be considered or the possible scenarios.
However, these examples help to understand why and how these guidelines are followed.
These typical examples are provided voluntarily by anonymous market participants.
All instances follow a similar structure.
The group answers the question: Who are we?
Why do we follow guidelines?
How do we follow the rules?
The explanation of the compliance process is divided into the following parts: Setting proportionality process Decision Outlook Hawkish Fed and Omicron battle for market C position, U.S. crude oil opened down nearly 3 percent to hit a new near two-week low.
Please pay attention to the specific operation, the market is changing rapidly, investment needs to be cautious, the operation strategy is for reference only.
