The new FX Global Code will affect treasury but how?


The new FX Global Code will affect treasury but how?

No one could contest that the new FX Global Code endorsed by ATEL and also by EACT will have positive impacts on Corporate Treasurers. More than a year ago, the Bank for International Settlement (i.e. B.I.S.) published a first release of its FX Global Code to raise standards. It is also aimed at promoting fairness and currency markets efficiency. Such a code was needed to correct and to compensate the FX industry, which has suffered from a lack of trust in functioning (between participants in the market and also between the public and the market). The FX markets needed to rebuild trust to reinstall a much greater confidence that FX markets can better function and more appropriately. It will, of course, mainly affect how financial houses conduct themselves in FX dealing and how they behave towards their clients.

The main principles are focusing on ETHICS (1) market participants must behave in an ethical and professional manner to promote fairness and integrity; GOVERNANCE (2) is also required to apply solid and clear(er) policies, procedures and to act in a more responsible way; INFORMATION SHARING (3) to more accurately communicate and to protect confidential information, to adopt effective communication supporting robust, open, liquid and fair FX markets; EXECUTION (4) as market participants should exercise care in negotiating and executing FX transactions; RISK MANAGEMENT AND COMPLIANCE (5) because B.I.S. expects that market participants will promote and maintain strong controls and that they will ensure a compliance environment to effectively identify, monitor and report on the associated risks with engagements in the FX market; CONFIRMATION AND SETTLEMENT PROCESSES (6) as participants are supposed to put in place efficient, transparent and risk-mitigating processes to guarantee and timely settlement of FX transactions. Recent fines imposed to some large banks clearly demonstrate that Regulators and Supervisors need to remain cautious and to ensure respect of good market practices by banks. All corporate treasurers should benefit from these measures

with more clarity on policies, procedures and market practices. All-in, we could only agree that it is good news for treasurers and that all of us should endorsed and event adopt it.

François Masquelier, Chairman of ATEL