[LONDON] Adherence to a new code of conduct for currency markets will be voluntary but signing public attestations that they are keeping to it will focus the minds of senior managers at banks and other institutions, a senior Bank of England official said on Friday.
Attempts by banks to rig currency markets prompted regulators to revamp and strengthen codes of conduct for forex dealers.
In a speech made to the ACI association of currency dealers in London on Wednesday, the bank's executive director for markets, Chris Salmon, also pointed to the "supportive" nature of UK banking regulators' new senior managers regime for implementation of the new global guidelines.
But he stopped short of saying that managers would be held legally accountable for their firms keeping to the code, drawn up by a working group of the Bank for International Settlements over the past year.
"A sceptic might question the prospects for the success of this initiative," Mr Salmon said in his speech that was released to the media on Friday. "In a market where information asymmetries have been exploited for selfish motives - what good can a voluntary code of conduct really achieve?"
He laid out several reasons why he believed banks and financial institutions would keep to the code in years to come, including the UK Senior Managers and Certification Regime, soon to be extended beyond banks to all of Britain's regulated firms.
He said firms should be able to demonstrate publicly that their behaviour and practices in the FX market are in line with the Code's principles. That might include the development of an industry kite-mark which firms would have to earn.
"The widespread use of a common public attestation could be a powerful tool in this respect," he said. "It would provide a strong signal of a firm's commitment to following good practices and help focus the mind of the firm's senior management who would be asked to sign the attestation."