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I like a good acronym and one that we’ve been hearing a few rumblings about lately is the BIS FXWG – that is the Foreign Exchange Working Group (FXWG) established by the Bank for International Settlements (BIS). The FXWG was established in May 2015, to strengthen code of conduct standards and principles in foreign exchange markets. The group’s aims are to:

  • facilitate the establishment of a single global code of conduct standards and principles;
  • maintain and enhance principles-based approaches to best practice; and
  • develop proposals to promote and incentivise adherence to the code.

The project has been split into two ‘workstreams’. One to draft the new code and one to develop proposals to promote and incentivise adherence to the code.

The issues

According to the press, the new code will replace six existing FX codes of conduct that are already in force. It will deal with issues that go beyond the simple buying and selling of currencies, to include (among other things):

  • futures contracts that are activated at a later date; and
  • the difference between when banks are market-making and when they are acting as agents for clients.

Other matters outlined in the Bank of England’s Fair and Effective Markets Review (Final Report July 2015) include improving the controls and transparency around FX market practices, including ‘last look’ (the opportunity for the market makers to reject an order after a client commits to trade at a quoted price) and time stamping (showing the precise execution time of a transaction).


Guy Debelle, assistant governor of the Reserve Bank of Australia, has commented that the biggest challenge for the FXWG is to devise ways of making banks and other market participants adhere to the new code, which will comprise standards and principles, rather than rules. He added that it will be for Governments to devise sanctions in the event of market abuse.

The target date for finalisation of the code is May 2017 and it has recently been reported that the FXWG is on course to meet that target date, although it does seem to be early days and no doubt there will be a few more acronyms appearing along the way…

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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.