Monetary chiefs happy with new Foreign Exchange code

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Wellington, May 27, 2017

The Reserve Bank of New Zealand (RBNZ) and Financial Markets Authority (FMA) have welcomed the release of a new code to promote good practice in the international foreign exchange market.

The new Global Code of Conduct for the Foreign Exchange Market was released in London by the Bank for International Settlements on Thursday night.

It was developed by central banks and foreign exchange market participants from 16 international jurisdictions.

Principle-Based Code

“The code of conduct applies to both those buying and selling foreign exchange and is a principles-based code rather than a rules-based code,” Reserve Bank Deputy Governor Grant Spencer said.

“It aims to create greater confidence in the foreign exchange market and ensure it is functioning in the interests of all market participants. To comply with the code, firms will have to take practical steps such as training their staff and putting in place enhanced policies and procedures. Certainly, RBNZ would be following the code of conduct in its foreign exchange dealings,” he said.

FMA Capital Markets Director Garth Stanish has encouraged industry participants to adopt the code.

“The code is relevant to all parts of the wholesale FX industry that fall within the FMA’s conduct regulation. We support its objectives, which include the promotion of a robust, fair, liquid, open, and appropriately transparent foreign exchange market,” he said.

About the Code

The FX Global Code (Global Code) is a set of global principles of good practice in the foreign exchange market, developed to provide a common set of guidelines to promote the integrity and effective functioning of the wholesale foreign exchange market. It was developed by a partnership between central banks and Market Participants from 16 jurisdictions around the globe.

The purpose of the Global Code is to promote a robust, fair, liquid, open, and appropriately transparent market in which a diverse set of Market Participants, supported by resilient infrastructure, are able to confidently and effectively transact at competitive prices that reflect available market information and in a manner that conforms to acceptable standards of behaviour.

No legal imposition

The Global Code does not impose legal or regulatory obligations on Market Participants, nor does it substitute for regulation, but rather it is intended to serve as a supplement to any and all local laws, rules and regulations by identifying global good practices and processes.

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RBNZ Deputy Governor Grant Spencer

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