Risk premiums on nonfinancial corporate bonds, as measured by forward spreads far in the future, are relatively low compared with historical norms, although other indicators for this market do not point to overvaluation. An alternative way to identify imbalances is to focus more directly on measuring credit flows and exposures to credit risk.
The Code’s application is also designed to be proportional to the FX business that a participant is involved in. Clearly, there are some principles that aren’t directly relevant to the buy-side. Most obvious are those principles that deal with handling client orders or client mark ups. Ultimately, the Code’s principles are there to give market participants confidence in how the market is operating.