The Bank of England welcomes the announcement today by the Financial Conduct Authority (FCA) that it has recognised the voluntary FX Global and UK Money Markets Codes under its codes recognition scheme. The FCA’s scheme was launched last year and is for codes that apply to unregulated financial markets and activities. It is the first time that the FCA has recognised a code under this scheme.
The Codes set out best practice in the global FX and UK money markets respectively. The FX Global Code is maintained and updated by the Global Foreign Exchange Committee (GFXC). This Code sets global principles of good practice standards in the foreign exchange (FX) market, promoting the integrity and effective functioning of the wholesale FX market. The UK Money Markets Code is maintained and updated by the Money Markets Committee. This Code sets standards and best practice expected from participants in the deposit, repo and securities lending markets in the United Kingdom.
Recognition of the Codes:
· Strengthens accountability by embedding the Codes in the Senior Managers and Certification Regime (SM&CR). Under that regime, as set out in the FCA’s conduct rules, market participants are required to observe proper standards of market conduct. Although industry codes are not mandatory, behaviour that is aligned to a recognised FCA code will tend to indicate that that this requirement is being met.
· Delivers a key milestone of the 2015 Fair and Effective Markets Review undertaken by the Bank, the FCA and HM Treasury; and
· Provides a timely reminder to those who are yet to sign up to the FX and money market Codes of the benefits of doing so.
Of today’s announcement, Andrew Hauser, Executive Director for Markets at the Bank of England said: “I welcome the FCA’s decision to recognise the global FX and UK money market Codes. The desire of market participants to embrace best practice is shown by how widely adoption has spread, with over 900 statements of commitment made to the FX Global Code and over 200 to the UK Money Markets Code. But we still have further to go – particularly amongst the asset management community. With the Senior Managers’ Regime expanding in scope from December 2019, recognition of these Codes by the FCA provides another, wholly positive, reason for those who haven’t yet signed up to do so – helping to build trust in financial markets, enhance corporate governance and empower your own business.”
Guy Debelle, Chair of the GFXC and Deputy Governor of the Reserve Bank of Australia said: “I welcome the FCA’s recognition of the Global Code, particularly given the importance of London in the global FX market.”
Gordon Lowson, Global Head of Liquidity Management, Aberdeen Standard Investments, said: “As Chair of the UK Money Markets Code Committee, I welcome the FCA’s Recognition of the Code. It confirms that the Code, whilst voluntary, should be supported and adhered to by all market participants. By doing so, all firms can now demonstrate to customers and regulators that they are conducting their business in line with the highest professional standards. In writing the Code, members of the Committee brought together the views of those active in these markets as to what best practice looked like. FCA Recognition is helpful in providing further assurance of fairness and transparency for all.”
Neill Penney, Managing Director, Global Head of Trading at Refinitiv said: “As a Member of the London FXJSC and Co-Vice Chair of the GFXC I am strong supporter of the FX Global Code. In the past two years we have seen a large number of market participants from across the globe choosing to follow the Code’s good practices. The FCA’s decision to recognise the Code supports further adoption by market participants in the UK, particularly on the buy-side, by providing a tangible benefit to those that adhere to the Code – it helps them meet their obligations under the SM&CR. I welcome this decision and encourage all market participants to sign up to the Code.
The FCA’s page on recognition of industry codes can be found here.