[ F I N A L
T H O U G H T S
|
H AY L E Y
M C D O W E L L ]
Hayley’s
Comment
Bringing FX up to Code
Senior reporter Hayley McDowell outlines the importance of industry-wide
adherence to the Global FX Code of Conduct
The introduction of the Global
Code of Conduct in May last year
was a turning point for the foreign
exchange (FX) industry, so it was
no surprise that the Code was a hot
topic at the TradeTech FX Europe
conference.
Without doubt, the spirit of
establishing such an industry-wide
set of Principles addressing various
issues such as ethics, governance,
risk management, compliance, exe-
cution, settlement and information
sharing, is a positive move for FX.
But it is clear - particularly for the
buy-side - that compliance with the
Code has been a far greater task for
some firms.
The buy-side’s adoption of
the Code has been slower than
anticipated and it’s no wonder, as
asset managers have spent the bulk
of their time, money and other
resources over the past few years
implementing new technologies
82 // TheTrade // Autumn 2018
and frameworks to comply with Eu-
rope’s largest and most far-reaching
piece of legislation, MiFID II.
It is true that some of the Princi-
ples laid out in the Global Code may
only apply to a few businesses, so
compliance will seem less of a bur-
den for some than others. However,
the benefits of compliance with the
Code, particularly in a commercial
sense, are far more evident for the
sell-side.
Speakers at TradeTech FX
Europe, who were also heavily
involved in the development of the
Code, heralded the positive changes
seen in FX markets since the rules
were implemented, and and it’s
difficult to argue that the effects of
the Code have so far been positive.
Looking to the future, it’s clear that
the buy-side needs a little nudge in
the right direction when it comes to
the Global Code of Conduct.
Buy-side outreach is a major
priority at the moment according to
those who spoke at TradeTech FX,
and rightly so. Speakers outlined
plans to ‘lower the bar of adoption’
for asset managers and identify the
problems and motivations for those
that have already signed up.
There’s no question that compli-
ance with the Global Code will cost
the buy-side time, money and at-
tention, much like compliance with
MiFID II. In some ways, forcing
compliance and placing the burden
on the buy-side seems slightly
unfair: It was after all the sell-side,
indeed some of the world’s largest
banks, that led the FX scandal
which brought investor confidence
in the industry to its knees.
With the Code looking to right
the wrongs in FX, industry-wide
adoption will be imperative in
mending that trust and bringing FX
into a new age of transparency and
best practice.