Code of Conduct for the Forex Market
What is the Forex Market Code of Conduct and what are its objectives?
The FX Global Code is a collection of 55 global principles of sound professional practice in the foreign exchange (Forex) market. The Global Forex Code comprises a total of 55 principles, all of which aim to establish a common set of guidelines designed to promote the integrity and effective functioning of the institutional foreign exchange market. The Code of Conduct aims to improve the foreign exchange market by promoting the concepts of integrity, fairness, liquidity, openness and transparency in a way that supports the dissemination of high ethical and professional standards and allows market participants to interact with confidence and effectiveness.
What are the core principles of the Forex Market Code of Conduct
- The Code of Ethics comprises a total of 55 principles, but focuses on six key principles: Ethics, Governance, Enforcement, Information Sharing, Compliance and Risk Management, Accounting and Assurance Processes.
- Ethics: The Code expects market participants to act ethically and professionally to promote principles of fairness and integrity in the foreign exchange market.
- Governance: The Code expects market participants to adhere to an effective governance framework to enhance accountability and responsibility and ensure comprehensive oversight of their activities in the foreign exchange market to encourage responsible participation in this important sector .
- Implementation: The Code requires participants to exercise due diligence in negotiating and executing transactions to promote the concepts of reliability, fairness, openness, liquidity and transparency in the foreign exchange market.
- Information Sharing: The blog expects participants to ensure their correspondence is clear and accurate in order to protect confidential information and to promote the importance of effective communication in support of the concepts of reliability, fairness, openness, liquidity and transparency in the foreign exchange market.
- Compliance and Risk Management: The Code expects participants to promote and maintain a complete compliance control environment that enhances their ability to effectively identify, manage and disclose risks associated with their participation in the foreign exchange market.
- Settlement and Hedging Processes: The Code expects market participants to develop reliable, efficient, transparent and risk-mitigating processes that promote the timely, smooth and predictable settlement of foreign exchange market transactions.
Who does the Forex Market Code of Conduct apply to
The FX Market Code of Conduct applies to all participants in the FX market, including buy-side and sell-side firms, non-bank liquidity providers, operators of electronic FX trading platforms, and other companies that provide transaction brokerage, execution and settlement services. The Code of Conduct defines a market participant as any person or organization (regardless of legal form) that:
Is active in the foreign exchange market as a normal part of its business, is actively involved in buying or selling one currency for another, or engages in transactions designed to make a profit or loss based on a change in one or more foreign exchange rates, such as financial derivative instruments, whether negotiable, deliverable or non-deliverable and whether directly or indirectly through other market participants; or
administers or operates a facility, system, platform or organization through which participants can conduct the types of transactions referred to in the previous paragraph; or
Provides standard execution services on the Forex market; And
It is not considered a participant in the retail forex market in the relevant jurisdictions.
According to GFXC, the following categories of individuals or entities are generally expected to engage in Forex activity as market participants:
Central banks, unless this would impede the performance of their legal obligations or monetary policy functions;
Quasi-sovereign investment funds and cross-border corporations, unless this would prevent them from performing the functions of their regulatory duties;
asset managers, sovereign wealth funds, hedge funds, pension funds and insurance companies;
Corporate treasury departments or the corporate treasury center that conducts foreign business (outside the scope of the group to which it belongs), whether on its own account or on behalf of the parent company, subsidiaries, branches or joint venturesthe group it represents.
family investment offices that manage treasury operations;
providers of standards implementation services;
non-bank liquidity providers; Firms employing automated trading strategies, including high-intensity trading strategies, and/or providing algorithmic execution services;
brokerage firms (including retail foreign exchange brokers); investment advisor; aggregators for trading services; and similar brokers/agents;
money transfer companies, bureaux de change and financial services companies in their interactions with the wholesale forex markets;
electronic forex trading platforms;
confirmation and billing platforms; And
Any company that is classified as a participant in the foreign exchange market in the relevant jurisdictions.
The following categories of persons or entities that engage in foreign exchange transactions are not generally classified as market participants:
price display platforms
money transfer companies, bureaux de change and money service companies in their interactions with retail customers;
private banking clients when acting as an individual or through personal investment vehicles; And
the broad masses.
Is there a body that enforces the Forex Market Code of Conduct?
The Forex Code of Conduct is entirely voluntary, but signing the code may be a requirement for membership in some forex authorities, and some central banks may require their counterparties in transactions to sign it. The Code of Conduct is intended to provide a supplementary framework to local laws, rules and regulations, but is not intended to impose any legal or regulatory obligations on participants in the foreign exchange market, nor is it a substitute for regulation.Government. The signing of this Commitment does not create any legal obligations for the signing institution, including reporting obligations to GFXC, other than those required by the laws, rules and regulations applicable to it and the requirements for operating in the foreign exchange market in each jurisdiction it operates. Furthermore, the decision to check compliance with the rules of the Code of Conduct rests with each market participant, unless required by the regulatory framework of the jurisdiction in which the market participants operate.