Model Code To Be Launched Today

PARIS—The long-awaited model code of conduct will be launched today (Saturday) at the ACI General Assembly.

The code, which has been under development for 18 months establishes – for the first time – a single unified code of conduct for the forex markets.

The existing codes of London, New York, Singapore, Tokyo and the ACI, are generally about 90 per cent in agreement with each other, says Denis Nolan, director of training consultancy, Arbitrain, who was commissioned to write the code.

But there were some differences, mostly in emphasis and a few issues where the codes did not agree, that needed to be addressed he says. The five previously designated codes were all structured differently and not all codes ruled on every topic. Some neglect electronic broking, netting and internet trading.

Curiously enough the Singapore code does not emphasise the need for the separation of front and back-office reporting and responsibility.

The unified code should play an important role in providing one unified code for market participants to adhere to and it will also be of great help to dealers in the smaller centres, says Nolan, by providing a “one-stop shop” for dealers who may have previously had be familiar with all five codes.

According to Denis Nolan, one of the most important feature in the model code is the extensive section clarifying market terminology.

Complex and specialist market jargon has evolved in the industry that can be interpreted in different ways, particularly with the development of the newer markets and the use of terminology common to more than one market, says Nolan.Terminology such as “mine” and “yours” may not have a universal common meaning between markets.

And confusion over this issue could be very costly. “A comprehensive definition of market terminology helps avoid expensive errors,” says Nolan.

Nolan has worked in the forex markets for over 30 years, and has worked in many of the world’s financial centres.