Can Forex Traders Keep Each Other Honest?: QuickTake Q&A
A sign advertising U.S. dollar, euro, pound sterling and swiss franc exchange rates stands outside a foreign currency exchange bureau in Budapest, Hungary, on Tuesday, Dec. 27, 2016. Hungarian retail sales rose at the slowest pace since the start of the year in October, casting doubt on cabinet projections that a fourth-quarter upswing will lift economic growth to the government's target.
Photographer: Akos Stiller/BloombergThe world’s biggest financial market has a new set of do’s and don’ts. The FX Global Code, published in May, aims to stamp out misconduct in foreign exchange -- the trade of national currencies -- following a rigging scandal that triggered about $10 billion in fines for banks. More than 40 industry veterans spent two years drafting the code, with guidance from central bankers. This is the “last chance to try and get things right” in the $5.1 trillion-a-day market, said Guy Debelle, deputy governor of the Reserve Bank of Australia, who led the group of policy makers working on the standards.
It won’t. The code is voluntary and not legally binding -- in its own words, "intended to serve as a supplement to any and all local laws, rules and regulations by identifying global good practices and processes." The hope is that peer pressure will lead to an industrywide rise in standards. “For the code to be effective, and for it to achieve what we want it to achieve, it will need to be accepted and endorsed across the full spectrum of market participants,” Debelle said in a speech in March.