FCA seeks to ‘give teeth’ to forex trading code with endorsement
UK regulator backs code of conduct in attempt to boost adoption
The UK’s financial regulator has endorsed a voluntary code outlining good conduct in currency trading for the first time, in a move intended to boost compliance among senior bankers and investors.
A code of conduct covering currencies trading was drawn up by central banks and market participants in 2017, but on Wednesday the Financial Conduct Authority explicitly linked it to its Senior Managers and Certification Regime, which holds senior bankers accountable for bad practice and which will be extended to asset managers in December.
The regulator has no official oversight of the $5.1tn-a-day currencies market and it will not supervise individuals or companies directly against the guidelines. But with the link to the SM&CR, the regulator is hoping to “give teeth” to the voluntary code.
The FX Global Code of Conduct was created by 16 central banks and the private sector following a mandate by the Bank for International Settlements to draw up new standards for good conduct in currencies market after allegations of misconduct and hefty fines on banks. The document was published in 2017 and since then the European Central Bank has insisted that its currency-trading counterparts sign up to the principles.
While the majority of major banks and dealers have signed up to adhere to the code, industry participants say take-up from investors has been slow.
Andrew Hauser, executive director for markets at the Bank of England, welcomed the FCA’s decision and said the move provides “another, wholly positive reason” to sign up to the code as it helps to build trust in financial markets and enhances corporate governance. “We still have further to go — particularly amongst the asset management community,” he said.