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Central banks launch code of conduct to promote good practice for FX markets

CENTRAL banks on Thursday launched a single code of conduct for the world's foreign-exchange (FX) markets to encourage ethical behaviour.

Called FX Global Code, it is a set of principles of good practice for wholesale FX markets globally. The Code is intended to promote the integrity and effective functioning of the market by ensuring a consistent set of good practices adopted across jurisdictions.

In a joint press release, the Monetary Authority of Singapore, Bank of Korea, the Hong Kong Monetary Authority, the Reserve Bank of Australia and the Reserve Bank of India welcomed the Code.

The central banks said they will be engaging local-market participants to promote adherence to the Code.

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"Given the increasing volume of FX activity taking place in Asia, they encourage all market participants based in their jurisdictions to adhere to the principles of the Code.

"Market participants are also encouraged to demonstrate their commitment to adhere to the Code through the Statement of Commitment, which is published as part of the Code," they said.

The Code was developed through a collaborative process between the Bank for International Settlements' Foreign Exchange Working Group and private-sector market participants.

The process took two years and involved extensive outreach to multiple stakeholders to arrive at a strong consensus of good market practice.

The Code sets out principles that promote a robust, fair, liquid, open and appropriately transparent market, underpinned by high ethical standards.

It is voluntary and applies to wholesale FX market participants.