Foreign exchange conduct code drawn up in wake of global currency rigging
A new code of conduct has been drawn up to help rebuild trust in the £4 trillion-a-day foreign exchange market after the recent global currency rigging scandal.
The Bank for International Settlements (BIS) unveiled its first phase of the code, which sets out standards for conduct and behaviour across global forex markets.
Central banks worldwide welcomed the move, which comes in the wake of the international regulatory investigations into manipulation of currency markets.
British banking giants Barclays and Royal Bank of Scotland were among those that agreed hefty settlements under the probe.
Investors are also now filing private lawsuits against banks alleging that they colluded to fix forex prices dating back to 2003.
The first phase of the code of conduct covers six principles.
These include new standards for ethics and addressing conflicts of interest with clients, better governance, information sharing and protecting customer interests, fair and transparent dealing, robust risk management and compliance controls and timely confirmations and settlement.
The code was drawn up by the Foreign Exchange Working Group (FXWG) which was chaired by Guy Debelle, assistant governor of the Reserve Bank of Australia.
He said: "In a globalised world, the foreign exchange market is one of the most vital parts of the financial plumbing.
"One of the guiding principles underpinning our work is that the code should promote a robust, fair, liquid, open, and transparent market."
The group began working on the code of conduct in July 2015 and will publish its complete code next May.
Global bank governors in the Economic Consultative Committee (ECC) and the Global Economy Meeting (GEM) said: "We expect market participants will evolve their practices to be consistent with the principles contained in the global code in order to promote a robust, fair, liquid, open and transparent market underpinned by high ethical standards."
In the round of mammoth settlements seen in 2014 and 2015, Barclays agreed a £1.53 billion fine with US and UK authorities, including £284.4 million to Britain's Financial Conduct Authority (FCA).
The group also pleaded guilty to a violation of US anti-trust law.
RBS was also among banks fined in May 2015, agreeing to pay a further 669 million US dollars (£455 million) to US authorities , which came on top of a £399 million penalty in November 2014 to regulators on both sides of the Atlantic.
US banks JP Morgan Chase & Co, Bank of America and Citigroup as well as Swiss bank UBS were also hit with fines in the May 2015 settlements.