Global Foreign Exchange Committee Elects New Chair
The Global Foreign Exchange Committee (GFXC) met on 22 May, as part of a two-day meeting in Tokyo, Japan, which was hosted by the Bank of Japan. At its meeting, the GFXC selected a new Chair, discussed the progress of designated working groups, provided updates on its organization and governance, and considered future areas of work.
The GFXC nominated and elected Guy Debelle, Deputy Governor of the Reserve Bank of Australia, as Chair for a two-year term, effective in early July 2019. Mr. Debelle will succeed outgoing GFXC Chair, Simon Potter, Executive Vice President of the Federal Reserve Bank of New York.
“I am very honoured to be nominated to chair the GFXC. I am looking forward to leading the GFXC in continuing the work to promote the integrity and effective functioning of the Foreign Exchange market,” said Mr. Debelle. “There are a number of challenges facing the GFXC over the next two years that I will seek to actively engage the broader membership of the GFXC in addressing.”
“Guy has played a pivotal role in the global foreign exchange market for many years and was central to the creation of the FX Global Code and of the GFXC,” said Mr. Potter. “It has been an honor to serve as Chair, and I look forward to continuing my engagement with the GFXC.”
The GFXC also welcomed the Moscow FX Joint Standing Committee as a full member, with participation at the meeting from Sergey Romanchuk of Metallinvestbank.
During the meeting, the GFXC discussed the progress of its four working groups to focus on specific areas: “cover and deal” trading activity, disclosures, buy-side outreach, and embedding the Code.
The Cover and Deal working group discussed progress, since its report published in February 2019, to develop examples related to key aspects of cover and deal trading. Topics raised included a general lack of awareness around the use of cover and deal trading models and this type of activity across the market. The GFXC agreed to finalize any additional examples in the context of the three-year review (detail below), and also agreed that examples related to anonymous trading platforms should move to the Disclosures working group for further discussion.
Following publication of its report in February 2019, which set out the areas for improvement in disclosures and the eight characteristics to support effective disclosures, the Disclosures working group continued its discussion around key aspects of its work during the meeting. The working group highlighted the focus of its work around i) articulating key disclosures-related topics that market participants should be mindful of when engaging in anonymous platforms, and ii) mapping the flow of information across parties engaging on anonymous trading platforms. The GFXC agreed that this work merits further discussion, including through a report to generate broader public engagement on the issues.
The Buy Side Outreach working group provided an update on its extensive engagement efforts over the preceding six months. The working group presented several materials and tools it has developed to help socialize and increase adoption with buy side firms. The GFXC agreed to finalize many of these materials for publication following the meeting. In addition, the GFXC heard further from the working group about a webinar it hosted in the spring to engage the buy side, and the GFXC agreed to publish the webinar, which is now available on its website.
The Embedding the Code working group reviewed how the Statement of Commitment has been used by market participants, in particular since the launch of the Global Index in May 2018. The GFXC agreed to streamline existing guidance, and where relevant produce new guidance, to aid those market participants that are in the process of signing up to the Global Code. The GFXC also discussed the structure, timelines and target population for the 2019 GFXC survey, which is expected to take place in the second half of the year.
The GFXC also agreed to begin planning for a three-year review of the FX Global Code, in accordance with the GFXC’s Terms of Reference. The GFXC will solicit feedback from a wide range of market participants in preparation for the review.
During a second day of the meeting, the GFXC expects to hear from each of its members about FX industry developments within their jurisdiction. The GFXC will also receive a topical presentation on “flash crash events” in FX markets, during which it will discuss the potential causes of these events, impacts across the marketplace, and potential responses by the GFXC.
Finally, as part of its governance, the GFXC also agreed to adopt revisions to the Terms of Reference that include an update on member responsibilities and representation to the GFXC, additional detail on the leadership structure and responsibilities of the Secretariat, and new sections on working groups and competition guidelines.
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