Following major scandals, multi-billion dollar fines and embarrassing revelations about how the FX trading desks at the big multinational banks are manipulating the markets in their favor, regulators might finally be able to coordinate a global response mechanism. According to Reuters, Central banks say they can unify the world’s different codes of conduct as soon as two years from now.
An annual meeting in Tokyo last month of the committees which regulate the FX industry seems to advance the efforts to create an overarching framework for monitoring trader’s behavior. The meeting’s summary indicates that there will be further work on harmonizing codes after an eight-page global preamble is published. That preamble will sit on top of regional codes, which run upwards of 100 pages.
Some central bankers even claim that the project may have enough momentum to overcome long-standing differences between the big markets in London, Tokyo and New York.
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“If we can come up with some regime which is broadly the same right across the whole market, then it will be good for all sides of the market,” a senior official from one G10 central bank told Reuters. “One place to start will be to say here are all the codes, what are the similarities, what are the differences, what can we do to flesh out the commonalities. That work is going to go on over the next few months.”
A second official from another major central bank said the first stage of work would involve redrafting existing codes to unify the texts, which should lead to further work. “London, New York, Tokyo use their own codes and you have to respect the specificities,” he said. “But I think that the fact the industry is global means there is an inexorable push towards something common. We have not achieved anything yet but I am pretty positive on our ability to do so in the medium term.”