GFXC to Continue Work Programme: Reminds Slow Re-Adopters of FX Global Code

The Global Foreign Exchange Committee met in person for the first time since the pandemic hit on June 27-28 and agreed the work programme for the next two years, including a survey of market participants to gauge their reaction to the revised FX Global Code, published in July 2021. During the meeting, the Swiss National Bank’s Andréa Maechler, chair of the GFXC, warned that the committee expects those firms yet to renew their Statement of Commitment to the revised Code to “do so shortly”.

The work programme, which is intended to take the GFXC through to the next three-year review of the Code in 2024, was largely created at the previous meeting in December 2021. St that meeting, to explore ways to make the Code and Statement of Commitment even more accessible to a wider group of market participants, a working group was established under GFXC c-vice chair, Richard de Roos. At the latest meeting de Roos presented a prototype of a Web-based tool, which aims to help market participants highlight those Principles in the Code that pertain most closely to their activity in the FX market. “I am sure this will be an invaluable resource for all buy-side participants and hopefully reduce the barriers to signing the Code even further, as they grow more comfortable with how the Code applies to them,” de Roos says.

Additionally, the GFXC decided to establish a second working group to broaden the motivation for adherence to the Code. “It is vital to explore how the Code could play a more visible role in market participants’ good corporate governance by linking Code adherence to the ‘G’ in ESG,” says co-vice chair Stefanie Holtze-Jen, who will chair the new group.

Ahead of the next review of the Code, the GFXC also agreed to conduct a survey on its effectiveness as revised in 2021, as well as its associated material, including disclosures. This survey of market participants will take place in the third quarter of 2023 and will serve as a starting point for the transition to the next Code review.

The meeting also discussed market participants’ access to high-quality market data in order to ensure a robust, fair, open, liquid and appropriately transparent FX market. GFXC says the discussion showed that there was a need for it to further discuss the issue in more detail as part of the next Code review.

Reflecting the increased focus on settlement risk and innovation in the payments and settlement space, the latest meeting also head from Baton Systems, CLS Bank and Fnality, who showcased new technological solutions in this critical area. The chair of the Committee on Payments and Market Infrastructures (CPMI) Working Group on FX Payment-versus-Payment (PvP) also provided a progress update on its work. The GFXC agreed that it was important to keep abreast of technological innovations that could affect how FX transactions are settled and looked forward to the forthcoming CPMI consultative report on options for expanding PvP settlement.

“Our priorities going forward are clear,” says Maechler. “Almost a year since the publication of the revised Code a number of market participants have signed up to the Code and the GFXC expects those who have not yet renewed their Statement of Commitment to do so shortly. In order to foster even more widespread adoption of the Code, the GFXC must continue its efforts in ensuring that the cost of adherence reflects a market participant’s role in the FX market and that the tangible benefits of adherence are well understood.”