The lack of trust was impairing market functioning. The market needed to move towards a more favourable and desirable location, and allow participants to have much greater confidence that the market is functioning appropriately. It is also important to remember what the alternative was in the aftermath of the scandals.
There was a decent chance authorities could conclude that a substantial regulatory response was necessary to generate the desired improvement in market structure and conduct. But the Code provided the opportunity for the FX market to address the lack of trust and market dysfunction. The Code was developed through a public sector–private sector partnership.