The FX Global Code is a set of 55 global principles of good practice in the foreign exchange (Forex) market. It contains 55 principles in total and is aimed to provide a common set of guidelines created to promote the integrity and effective functioning of the wholesale Forex market. The Code promotes a robust, fair, liquid, open, and appropriately transparent Forex market and is intended to support the market by promoting high ethical and professional standards, enabling market participants to confidently and effectively transact in the marketplace. The latest version of the Code, released in July 2021, can be downloaded from the Global Foreign Exchange Committee site.
The first complete version of the Code was released by the Foreign Exchange Working Group (FXWG) on May 25, 2017, though some initial content was published the year before. The FXWG was established in July 2015 by the Bank for International Settlements and consisted of central banks from 16 jurisdictions around the globe. Currently, the Code is maintained and updated by the Global Foreign Exchange Committee (GFXC) — a forum established in May 2017, which brings together central banks and private sector participants with the aim to promote a robust, liquid, open, and appropriately transparent Forex market.
The Code was created in response to a number of high-profile Forex misconduct cases that came to light in 2013 and 2014 and highlighted the fact that the numerous, existing regional FX codes of conduct had been ineffective due to a lack of awareness of, or adherence to, these codes by some market participants. The key objective was to help restore trust and confidence in the Forex market.
While the Code has 55 principles in total, they are concentrated around six main principles: ethics, governance, execution, information sharing, risk management and compliance, confirmation and settlement processes.
The Code is applicable to all Forex market participants that engage in the Forex markets, including sell-side and buy-side entities, non-bank liquidity providers, operators of Forex e-trading platforms, and other entities providing brokerage, execution, and settlement services. For the purposes of the Code, a market participant is a person or organization (regardless of legal form) that:
According to the GFXC, the following types of persons or organizations would generally be expected to engage in Forex market activities as market participants:
The following types of persons or organizations would not generally be expected to engage in Forex market activities as market participants:
The Code is completely voluntary, though signing up to the Code is usually a requirement for joining local Forex committees as members and is expected by many central banks on their Forex counterparties. The Code is intended to serve as a supplement to local laws, rules, and regulations, and it is not intended to impose legal or regulatory obligations on market participants, nor is it a substitute for regulation. Signing the Statement of Commitment does not result in any legal obligations for an institution, including reporting obligations to the GFXC, outside of those dictated by the laws, rules, and regulations applicable to it and the Forex market in each jurisdiction in which it does business. Furthermore, the decision to audit for adherence to the Code rests solely with each market participant unless the regulatory framework of the jurisdictions in which the market participants operate specifically requires it.
The GFXC established case studies as a set of examples that illustrate companies' various considerations and steps to adhere to the Code, particularly taking account of the Code's proportionality concept. The case studies are not binding or prescriptive instructions and are not exhaustive of the considerations that should be taken into account or the situations that can arise. Nevertheless, the examples can help to understand the reasoning and process behind adhering to the Code. The stylized examples have been voluntarily provided by market participants, though the exact names of the participants are not revealed.
Each example follows a similar structure, with the institution answering the questions:
The explanation of the process of adherence is divided further into the following parts:
Here are links to specific case studies:
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