Debelle, Potter, Puth and Salmon – the GCC webinar

The lead authors of the Global Code of Conduct (GCC) for foreign exchange markets are set to appear as panellists on a webinar, hosted by FX Week, on May 25, the day the full and final version of the principles is released.

The webinar will be accessible to all registered individuals and the majority of the session will be spent on answering questions from the audience. The session will feature Guy Debelle, the chair of the Bank for International Settlements’ FX Working Group; Simon Potter, the leader of the workstream tasked with drafting the Code; David Puth, the leader of the Market Participants Group, representing the private sector and supporting the work of the FXWG; and Chris Salmon, the leader of the workstream in charge of developing adherence to the Code.

The code is set to be released at 9am that day and the live webinar will kick off at 11:30am. The four main authors of the Code will introduce the principles formulated during the second phase of the work. The work on the set of principles started in May 2015, when the BIS established the FXWG, under the auspices of the Markets Committee and chaired by Debelle.

The first phase of the document was released in May 2016 and it covered information sharing, the definition of agency and principal trading and pre-hedging among other issues. The focus during the second phase of the work was on execution and electronic trading, including the controversial last look practice.

In recent months, some market participants have been growing concerned that Principle 11 (last look) and Principle 17 (pre-hedging) don’t go as far as they could, following circulation of the fatal flaw version, so-called because it checks that all institutions involved in the process fail to find a fatal flaw that would prevent them from signing up.

Nevertheless, Puth said in an FX Week interview that the process of working out solutions to difficult questions was a relatively smooth one, with private-sector representatives on the MPG working together to find solutions, and he added that the creators of the Code managed to come up with a set of principles that the majority of the market can get behind.

Ahead of the final publication, attention is also increasingly turning to adherence methods and ways of ensuring that global currency industry participants understand and respect the rules, which are not regulation.

Salmon, who leads the work on the adherence piece, told FX Week in September last year that foreign exchange markets have just over three years to demonstrate voluntary adherence to the principles, otherwise currency markets could face prescriptive regulations as early as 2020.

Market participants will be required to sign up to the code as individuals, as well as adherence on an institutional level. Central banks participating in the work have already indicated they will abide by the rules and they would refuse to trade with counterparties not signed up to the GCC.

The idea of a public register and a series of attestation measures are also on the table, and in local economies domestic regulators will have the power to attach more punitive measures to the GCC. The UK’s Financial Conduct Authority and the Prudential Regulation Authority have already said they would use the Senior Managers’ Regime to enforce compliance with the Code, raising the spectre of adherence arbitrage on a global level, in the absence of similarly strict adherence mechanisms elsewhere.

As the GCC applies to all market segments in the FX industry, buy-side market participants will also be required to be compliant with the principles.

The webinar will provide an opportunity for all industry players to ask Debelle, Potter, Puth and Salmon questions live, just hours after the full and final text is released. To register, click here.