Simon Potter: The Foreign Exchange Global Code - lessons learned and next steps Remarks by Mr Simon M Potter, Executive Vice President of the Markets Group of the Federal Reserve Bank of New York, at the 2017 FX Week Conference, New York City, 12 July 2017. * * * I would like to thank Christina Getz and Jamie Pfeifer for their excellent assistance in the preparation of these remarks and colleagues in the global central bank and FX community for numerous insightful comments and suggestions. Good morning. It is a pleasure to return to FX Week USA, and I would like to thank FX Week for the invitation. Foreign exchange (FX) market participants play important roles in their interactions with the New York Fed. They act as FX trading counterparties of the New York Fed and they provide information on market conditions to support the Desk’s monitoring of financial markets and transmission of policy. I am pleased to have the opportunity to speak with you today. Before I begin, I would also like to note that my comments today reflect my own views and not necessarily those of the Federal Reserve Bank of New York or the Federal Reserve System. However, remarks on the expectations for FX counterparties reflect the policies of the Federal Reserve Bank of New York. At this event two years ago, I highlighted the important role the FX market plays in facilitating the flow of capital across the globe in support of international trade and investment.
The spectrum of buy side institutions active in FX is particularly complex and varied, encompassing hedge funds, high frequency trading firms, asset managers and corporates among others. The size and complexity of their FX market activities and the nature of those activities may differ significantly. Hearing the viewpoints of many different institutions was critical to delivering a relevant Code for this diverse landscape, recognizing that while the Code applies to all, the details of precisely how it applies may differ. I found that the series of frank debates and discussions that we—market participants and central bankers alike—had over the past two years was an important process in itself, and not just a means to an end. The result was multiple drafts of the Code and, ultimately, a product that more clearly articulated principles and defined terminology. The 55 principles within the Global Code focus on promoting transparency, fairness and mitigating risk across six primary areas–Ethics, Governance, Execution, Information Sharing, Risk Management and Compliance, and Confirmation and Settlement. I would like to highlight a few of these principles to provide a sense of the Code’s content, and use these examples to illustrate some of the fundamental building blocks of a fair, transparent, and efficient market. The Code begins with principles on ethics. The very first principle states that Market Participants should strive for the highest ethical standards. While this is a basic concept, the principle is fundamental and underpins each and every principle that follows.