Numerous banks and regulators from across the world have voiced their support for a new initiative that seeks to stamp out malpractice within foreign exchange trading.

A raft of banks and regulators from across the world have shown support for a new set of principles that seek to promote sound practice in the foreign exchange market. 

The FX Global Code was “developed to provide a common set of guidelines to promote the integrity and effective functioning of the wholesale foreign exchange market,” the Global Foreign Exchange Committee said in a statement last week. 

But the 78-page document does not impose legal or regulatory obligations on market participants, nor does it replace regulation.

“It is intended to serve as a supplement to any and all local laws, rules, and regulation by identifying global good practices and processes,” the document stated in the foreword section. 

The code comes as regulators and legal authorities globally continue to crack down on malpractice within foreign exchange. Several banks and former traders have been handed retrospective penalties and in some cases jail sentences as a result of crooked trading practices. 

The code has been welcomed by several regulators and banks, including the UK's Financial Conduct Authority, the Monetary Authority of Singapore, Hong Kong Monetary Authority and Bank of Korea. 

“BOK, HKMA, MAS, Reserve Bank of Australia, Reserve Bank of India strongly support the principles of good practices within the code and will be engaging local market participants to promote adherence to the code,” MAS said in a statement last week. “Given the increasing volume of FX activity taking place in Asia, they encourage all market participants based in their jurisdictions to adhere to the principles of the code.”

Meanwhile, the UK's FCA said: “Standards can be a useful way for the industry to police itself in support of our regulatory work and can help firms to communicate expectations of individuals when linked to the senior managers and certification regime.”

The watchdog continued: “We expect firms, senior managers, certified individuals and other relevant persons to take responsibility for and be able to demonstrate their own adherence with standards of market conduct. Our supervision of the SMCR rules supports this.

“Firms have already begun work to ensure their FX businesses satisfy the principles of the FX Global Code. Firms can help to promote the wide adoption of the code by expecting their FX counterparties also take steps to adhere to the code as it applies to them.”

(Repeat of item originally published here yesterday.)