Code Comparison Recently, the Federal Reserve Bank of New York led an initiative to compare the global codes of best market practices to help identify similarities/ differences and to determine whether one single global code of conduct was a viable objective.
Tere are currently five separate committee codes in London, New York, Singapore, Tokyo and Hong Kong in addition to the ACI Te Model Code (TMOC) which has been adopted by Australia, Europe and Canada (amongst others).
All these codes intend to promote best practices and to encourage high standards of conduct and professionalism in the wholesale market. Te current review of the codes by the Canadian Foreign Exchange Committee, CFEC and the Federal Reserve Bank of New York raises the question: ‘Is there scope for a single, global code across the groups?’
Well, the diversity of markets and products now traded and arbitraged by bank dealers dictates that there will inevitably be some areas of overlap where separate individual or local market codes already exist – probably more similarities than differences.
Launch of FX Best Practices in Operations
In response to these international ongoing initiatives, ACI updated its code of ‘FX Best Practices in Operations’ which became officially launched during the last congress in Dubai March this year.
Te update was developed by a team led by Andreas Gaus, Credit Suisse, member of the ACI Board of Education and Chairman of the European Central Bank Operations Management Group (OMG), who reviewed the Bank of England Non-Investment Products (NIPS) Code, the Federal Reserve Bank’s 60 Best Practices and the ECB’s OMG documents, among other documents, which were then formulated and updated to create a new benchmark.
Te team reviewed the above documents, and ISDA’s documents as well as the existing ACI Model
Best Practices – Setting the Scene
Code’s chapter on Operations and formulated a new benchmark of FX Best Practices.
Te team was comprised of individuals from Banque de France, CECA, Goldman Sachs, UBS, Banco de Portugal, Nordea, Dexia, Deutsche Bundesbank, HSBC, Credit Suisse and Citi. An external review was provided by Central banks and numerous Global Operations Managers from the Operations Committees of the Reserve Bank of Australia, the Monetary Authority of Singapore (MAS), the Bank of Japan, the US Federal Reserve System (FED), the Bank of England, and many other banks and professionals.
84 FX Best Practices in Operations have been up- dated or re-defined. Te findings will now become implemented into the Model Code Chapter in Operations.
Remarkably is the number of volunteers, bank institutions and authorities cooperating in a ‘non- binding’ but recommended and mainly accepted international Model Code which is aiming to enhance existing market practices – without the need of becoming legislative.
Market professionalism but not lobbying of singular financial institutions has as usual come to the fore.
july 2012 e-FOREX | 21
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