Adoption of the Code
With the official announcement of the GFXC in May 2017, the GFXC expected that it would generally take 6 – 12 months for market
participants to review the Global Code and align, if necessary, their FX activities with the Global Code’s 55 principles. The number of
Statement of Commitment accelerated in the months leading up to May 2018. Since then, the numbers have increased steadily.
The first 60 buy-side firms committed to the Global Code are generally larger asset management firms that typically are associated
with a local FX committee. In fact, 13 of the top 25 largest asset management firms have declared their commitment to adhere to the
Global Code.
Additionally, the European Association of Corporate Treasurers (EACT), which strongly supports the Global Code, established a public
registry to allow non-financial corporates to register their statement of commitment to the Global Code 4 . The register is included in
the Global Index 5 which provides a more comprehensive view of market participants' commitment to good practices. The working
group would also like to see a similar register for the asset management industry.
In the beginning, European firms were slower to adopt the Global Code as MIFID II was consuming time and resources but now more
attention is turning to the Global Code and firms are catching up over time. MiFID II is more onerous and prescriptive and, in many
respects, touches on similar principles which are also reflected in the Global Code. While Spot is not included in the MIFID II scope it
should be straightforward to adopt the same processes and procedures for ongoing adherence to the Global Code.
Some ways firms can ensure ongoing adherence to the Global Code are:
•
Internal training workshops and e-learning initiatives to educate staff.
•
Role play to prepare the staff and regular active discussions surrounding ambiguous situations.
•
Regular review of processes and procedures.
A few buy-side firms still object to adhering to the Global Code with the rationale that they were historically not the root cause to the
misconduct on the FX market. The objective of the Global Code is however intended to apply to the entire FX market, including the
buy side. This is why it is so important for the working group to outline the benefits for the buy-side community adopting the Global
Code so everyone understands it is not just a question of costly time and resource processes but it can actually improve execution
quality and lower costs of execution. Clarifying the proportionality concept will assist the smaller and less active firms in their
considerations of signing up to the Code as they simply don’t have the same level of resources at hand as larger institutions.
GFXC work in progress
GFXC has recently stablished additional working groups to investigating further a) the role of “cover and deal” and similar trading
models in FX markets and b) the role that disclosures can play in establishing clarity around the trading practices of market
participants.
Background information about the Global Code
In May 2017, the GFXC launched the Global Code with the intention of promoting good practice in terms of transparency and ethics
and improving the integrity of the wholesale FX market. The Global Code reflects a collective judgement as to what constitutes
good practice in the FX market and was drafted during a 2-year consultation process taking into account thorough considerations
by a broad set of participants in the industry. The Global Code provides a set of ‘global principles’ which market participants are
encouraged to embed within their firm and commit to by signing a disclosure known as the ‘Statement of Commitment’. The GFXC
owns the Global Code and is responsible for developing and maintaining it. The UK Financial Conduct Authority is supporting the
Global Code as a guideline for the Senior Managers and Certification Regime.
For more information about the GFXC’s buy-side outreach group, please register for the 7 th annual Alpha Trader Forum Global Summit
FX Day 7 th February 2019 in London.
Copyright: K&K Global Consulting Ltd. (2018)
Further references:
The GFXC: https://www.globalfxc.org
Foreign Exchange Contact Group (FXCG) https://www.ecb.europa.eu/paym/groups/fxcg/html/index.en.html
3
Nex Markets, “The FX Global Code: changing transparency and behaviour”, September 2018
4
The Global Code https://www.eact.eu/fx-global-code
5
Global Index https://www.globalfxc.org/global_index.htm
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