Monday 27 May 2024
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FRANKFURT (March 27): Central banks in the world’s biggest currency markets will publish on Monday principles of behaviour and ethics for foreign-exchange trading, according to a person familiar with the document.

The “Global Preamble: Codes of Best Market Practice and Shared Global Principles”, inspired by a Financial Stability Board proposal in September, was ratified after consultations in eight markets around the world, according to the person, who asked not to be identified because the talks are private.

The global move to improve standards of behaviour is part of an overhaul after allegations traders colluded to rig rates in the US$5.3 trillion-a-day currency market.

The list of principles was the first item for discussion at the annual global meeting of foreign-exchange committees that was hosted by the Bank of Japan on Monday, according to an agenda posted on the Federal Reserve Bank of New York’s website.

The delivery of the principles is on schedule after a consultation period that was slated to end this month.

The proposal was circulated to local foreign-exchange market committees managed by central banks in Australia, Canada, Hong Kong, Britain, New York, Singapore, Tokyo and by the European Central Bank, which have backed the preamble, the person said.

In London, the world’s biggest currency market, the Bank of England’s Foreign Exchange Joint Standing Committee was presented the principles at a meeting on March 18 by the BOE’s Head of Foreign Exchange Michael Cross.

London fix
The FSB’s recommendations include requirements for systems and controls to develop and promote ethical behaviour, and codes of conduct.

In its Sept 30 report, regulators had supported extending the width of the trading window used to calculate foreign exchange rates to five minutes from the one-minute windows in which the WM/Reuters rates, including the key 4pm London fix, were being set.

The Wall Street Journal earlier reported that central banks had agreed on a set of guidelines for the currency market.

It said that the principles would ban traders from sharing client identities and information and disclosing data that could allow someone to deduce that information.

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