Feedback Sought On FX Global Code
The Global Foreign Exchange committee (GFXC) is seeking industry feedback on proposals arising from its 3-year review of the FX Global Code. These proposals include both updates to the Code and the publication of templates that would be used by industry participants to improve disclosures and assist with transaction cost analysis.
The GFXC’s Request for Feedback covers proposals for updating the Code’s guidance in the following areas: anonymous trading, algorithmic trading and transaction cost analysis, disclosures and settlement risk. Changes to ten of the Code’s fifty-five principles are proposed.
One thing about US Eq markets… they really do comment periods properly: everything public; published near real-time; you can even respond to letters back and forth.
This is fairly new to FX but GFXC is asking for feedback
on the Code.
— Matt Clarke (@Matt_Clark3) April 9, 2021
The GFXC is also seeking feedback on Disclosure Cover Sheets it has developed for both liquidity providers and FX venues. These would help Market Participants navigate what can be lengthy and complex disclosures documents. In doing so, they will facilitate the process of Market Participants making informed decisions about whom they engage with and how.
Templates to foster the provision of standardised information by providers of execution algorithms have also been published for comment. This includes a Transaction Cost Data Template to support analysis by users of algorithms and a FX Algo Due Diligence Template that would help assist in the disclosure of relevant information to users.
GFXC Chair Guy Debelle commented that: “The proposed changes to the Code are targeted on the key focus areas that the GFXC identified from its earlier engagement with market participants. Many of the changes are designed to facilitate greater transparency via disclosure, and also to ensure that the information being provided is relevant and accessible to market participants. We have already consulted widely with the members of the local FXCs on the proposals developed by our global Working Groups. We are now looking for input from other industry participants.”
Feedback on the GFXC’s proposals is sought by 7 May. After considering the feedback received, the proposals will be finalised for approval by the GFXC at its June 2021 meeting, following a fatal flaw review by the local FXCs. The updated version of the Code will be published shortly after.
Separately, the GFXC is developing additional guidance material on the practices of ‘last look’ and ‘prehedging’.
This guidance material is intended to promote wider knowledge and understanding of these practices and highlight how they relate to the Code’s existing principles for good practice in these areas. This material has also already had feedback from local FXCs and is being revised to take account of that feedback. Further feedback on this material will be sought from the broader industry in May, in addition to the local FXCs.
Algorithms have become more prevalent in the spot FX market.
Global Foreign Exchange Committee has made recommendations on Last Look.
There is a growing demand for transparency in FX trading by regulators.
CLS has also enhanced its existing suite of alternative FX data products.
FX Global Code sets out good practice for last look and provides illustrative examples.