GFXC Meeting Completes Code Three-Year Review

The Global Foreign Exchange Committee (GFXC) has completed the work on the latest three-year review of the FX Global Code at a two-day virtual meeting.

The FX settlement risk and FX data working groups presented their final proposals for inclusion in the Code, and provided an overview of how the proposals had been modified to address comments received from local FX committees around the world and the request for feedback, which took place in October. The GFXC says the committee expressed “strong support” for the proposed amendments, which aim to strengthen the Code’s guidance on FX settlement risk and to increase transparency around certain types of FX transactions and the use of client-generated data on electronic trading platforms.

The GFXC working groups’ plans for 2025 were also presented, which will include an analysis of the FX settlement risk data from the 2025 Bank for International Settlements’ Triennial FX Turnover Survey, due to be taken in April. This data has been trialled by the UK FX Joint Standing Committee and Australian FX Committee in their semi-annual turnover surveys and will now be presented globally by the BIS.

The GFXC also received an overview of the potential logistics for market participants to renew their Statements of Commitment (SoC) following the publication of the updated version of the Code. GFXC chair Gerardo García, told the meeting that there were now more than 1300 SoCs registered, although several institutions submit multiple statements on multiple registers, therefore the institutional coverage is likely to be less. Earlier this month, Phillippe Lintern of the Bank of England signalled a ramping up of pressure on hedge funds, who are largely conspicuous in their absence from the registers, to sign up to the Code, this is likely to be continued by the wider GFXC as 2025 progresses.

The Motivation for Adherence Working Group, which is responsible for building adoption of the Code provided an update on the GFXC efforts to increase the visibility and adoption of the Code through social media outlet and conferences, and also outlined the next steps to promote a deeper understanding of the benefits of Code adherence.

The committee also had two external sessions: a review of the International Swaps and Derivatives Association (ISDA) FX and Currency Options Definitions, and an overview of the International Organization of Securities Commission (IOSCO) pre-hedging consultation report.

García outlined the next steps, including the objectives of the working groups for 2025, noting the updated version of the Code will be finalised in December and published in early January 2025. It will be accompanied by a paper summarising the outcomes of the review and will include the responses received by the GFXC to the Request for Feedback on the proposals to amend the Code.

García praised this year’s work, and emphasised the challenges ahead, particularly in terms of increasing buy-side adherence to the Code. Indeed, he mentioned: “this is where we need to work the most, to have more institutions come closer to the GFXC and to adopt the Code…”