Press Release: GFXC meets to assess the progress on Code adherence, discuss recent developments on accelerated securities settlement and its impact on FX markets, update efforts around FX settlement data, and prepare for the upcoming three-year review of the Code

5 December 2023

During its two-day virtual meeting held on 30 November – 1 December, the GFXC (“the Committee”) reported significant advances in adherence to the FX Global Code (“the Code”). Its Chair, Gerardo García, reported that during 2023, the GFXC Global Index of Public Registers reached 1,290 Statements of Commitment, an annual increase of 8%. The Chair said, “This reflects considerable progress in the uptake of the Code. However, we remain focused on increasing adherence among a diverse set of market participants”.

On behalf of the former Proportionality Working Group, Richard de Roos (Standard Bank Group) presented statistics on the use of the Proportionality Self-Assessment Tool, and acknowledged its benefits in terms of promoting adherence to the Code. In turn, GFXC Co-Vice Chair, Stefanie Holtze-Jen (Deutsche International Private Bank), provided updates on the Code Adherence Working Group’s efforts to increase visibility of the FX Global Code; on its engagement with credit rating agencies and auditors to include the Code as part of their assessments of governance within institutions; and on the progress to incorporate the Code in professional certification programs, such as the Chartered Financial Analyst (CFA), Certified International Investment Analyst (CIIA), and Association of Corporate Treasurers (ACT).

Two topical issues were covered during the meeting. These were the work by ISDA to update the 1998 FX and Currency Options Definitions, and the impact of accelerated securities settlement on FX markets. GFXC members welcomed ISDA’s ongoing work to update the definitions, and examination of potential solutions for unscheduled holidays as it pertains to FX transactions.

In the panel chaired by GFXC Co-Vice Chair, Simon Manwaring (NatWest Markets), on accelerated securities settlement and its impact on FX markets, representatives from Global Financial Markets Association (“GFMA”) and CLS Group reviewed the challenges and possible solutions for FX transactions related to the expected transition to T+1 securities settlement in a number of countries. Participants noted that the reduction of the settlement cycle could impose additional complexities to post-trade processes, and that a closer coordination of security and FX settlements might be warranted. In turn, Seshsayee Gunturu (Reserve Bank of India), presented India’s experience in reducing the equity market settlement cycle from T+2 to T+1. He noted the importance of having a clear implementation timeline and of taking actions that mitigate market disruptions, such as extending cut-off times along the settlement process.

The Committee also discussed recent trends in FX market structure. Fragmentation, electronification, and the use of algorithms are all growing trends in FX markets and, as such, will be closely monitored by the GFXC.
For its part, the GFXC supported upcoming efforts by select local foreign exchange committees (LFXCs) to begin FX settlement data collection as part of the LFXCs’ semi-annual FX volume surveys. This global effort will enable more frequent collection and assessment of FX settlement risk, and is anticipated to launch in April 2024.

Heading into 2024, the GFXC discussed preparations for the upcoming three-year review of the Code. As part of this, the Committee reviewed the results of the 2023 FX Global Code Survey. Results indicated that a significant majority of market participants thought that the Code remains fit for purpose. Notwithstanding, the GFXC will engage with LFXCs further and finalize the priorities for the three-year review of the Code. The GFXC discussed the importance of maintaining a continued focus on topics such as FX settlement risk mitigation, enhancements to data transparency in FX transactions, and the use of disclosure cover sheets.

The next GFXC meeting will be in person in late June or early July 2024.

The minutes of this meeting will be published in January 2024.

For additional details on the GFXC and the FX Global Code, please visit the GFXC website.

Press inquiries:

GFXC Chair Office
Banco de México