Claire Cross comments on the FX Global Code in Law360

A new global code of conduct to clean up the $5 trillion daily foreign exchange market is a golden opportunity for financial firms to restore faith after a spate of trading scandals, lawyers say — but, they warn, the voluntary code also provides regulators a handy playbook to dish out massive fines for any future misconduct.

The Bank for International Settlements on Thursday launched the second phase of the Foreign Exchange Global Code to great fanfare, cementing a partnership between 21 central banks and many private-sector participants to rehabilitate the market tarred with several enforcement probes and antitrust litigation alleging manipulation.
The BIS, known as the central bank of central banks, produced 55 voluntary principles, covering ethics, transparency, governance and information-sharing, risk management, compliance, and confirmation and settlement procedures.

According to Claire Cross, of counsel at Corker Binning, the code is “welcome guidance” to a market “still nursing a badly damaged reputation.”

“Whilst not of itself regulation, the code will be one of the first documents that regulators turn to when considering cases of market abuse in this part of the industry,” she said, adding that it’s crucial that firms not reduce the principles laid out by BIS to tick-box exercises.

“The code will also be a useful means for the regulator to hold individuals to account,” she told Law360. “Ignore at your peril.”

Read the full article in Law360, behind a paywall, here.