- High stakes for foreign-exchange market after fixing scandal
- Participants aim to finalize stronger standards by May 2017
Rigorous standards are needed to improve behavior and rebuild trust in the $5.3 trillion-a-day global currency-trading business that’s been tarnished by a fixing scandal and billions of dollars in fines, says the head of an industry group responsible for helping develop a code of conduct.
"We need to deliver something that is sufficiently strong -- if we do something that is too high-level and too light, that misses the point, we’ll be sent back our rooms," David Puth, chief executive officer of CLS Group Holdings AG, which settles about $5 trillion of currency transactions a day, said at an event in New York Tuesday. Puth heads a group of 32 currency-market participants working with the The Bank for International Settlements to help create and implement the new standards, which they aim to finalize by May 2017.
Almost $9 billion in fines and penalties have been paid by five banks -- Citigroup Inc., JPMorgan Chase & Co., Barclays Plc and Royal Bank of Scotland Group Plc and UBS Group AG -- for misconduct in the foreign-exchange market, the Justice Department said in May. If the industry doesn’t create principles that are tough enough, Puth expects much stricter measures to be levied on market participants by government authorities.
"We’re going to come up with something that is sufficiently strong to drive market behavior in the right direction," Puth said at an event organized by the ACI America, an industry group. "Banks will have absolutely no choice but to implement the new codes."