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David Woolcock 7 min read

The Codes Are Not Just For Christmas

It has been a busy year for the various industry codes that have replaced the previous incumbents, such as the ACI FMA Model Code. Since its first release, the Global Foreign Exchange Committee (GFXC) has been busy with a first update to the FX Global Code (FXGC) which came out earlier this year. The updated version was recognised by the UK's FCA last month, alongside recognition of the Global Precious Metals Code. The UK Money Markets Code was recognised in June 2019.

In recognising the codes, the FCA also reiterated that

"Individuals subject to the Senior Managers and Certification Regime (SM&CR) need to meet requirements for market conduct, for both regulated and unregulated activities. Behaviour that is in line with an FCA recognised code will tend to indicate a person subject to the SM&CR is meeting their obligation to observe proper standards of market conduct in relation to unregulated markets. The FCA expects firms and individuals to consider both the spirit and letter of code provisions to make sure they fully meet proper standards of market conduct".


The FCA also clarified that the "Last Look" guidance given by the GFXC and Guy Debelle (outgoing Chair) stating,

"Regardless of the terminology used, last look practices that incorporate a delay that is additional to what is required to complete price and validity checks (some market participants refer to such deliberate delays as 'additional hold time') are not consistent with the Codes. For example, market participants should not prolong the duration of the last look window for the purpose of seeing if future prices move in their favour in relation to the client's trade request."


All this give the Codes "teeth", canine or otherwise! Indeed, it means that Codes are not just for Christmas in the UK! But, equally, the FCA followed up the FXGC guidance for anonymous platforms –

"For the FX Code, anonymous trading platforms would need to disclose whether their users are signatories to the Code. These could be important indicators or even determinants of execution quality, and so of direct relevance to those seeking best execution outcomes."

But, again, this could pose issues for UK platforms as similar guidance is not mirrored in other regulatory jurisdictions and will require some further thinking of how to implement this requirement practically.

On top of all this, we have a consultation from the FICC Markets Standard Board (FMSB) to ponder over the festive break which may help propagate the GFXC guidance on disclosures – this time by trading platform operators. A Statement of Good Practice for Trading Platform Disclosures has been published, and comments are invited by the 25th of February next year. In the transparency draft, six best practice statements on how those operating trading platforms should harmonise disclosures in a transparent and meaningful way are specified. A must-read on the holiday list for all operators and users - FMSB_SGP_Trading_Platforms_TD_FINAL.pdf

In the meantime, the GFXC has announced replacements for the Chair and one of the Vice-Chairs and have elected Andréa Maechler as the new Chair. In addition, Stefanie Holtze-Jen, CIO Asia-Pacific for Deutsche Bank – Private Bank, has been selected as co-vice chair. They take over at a time when the controversy, debate and comment about Last Look may, hopefully, fade into the background a bit, and they can concentrate on some other aspects of the FXGC in the run-up to the following review in just over two years!

Finally, as I wish you all a Merry Christmas and Happy New Year, my mind was cast to 2017 when the last look debate was getting into full flow. At the ACI FMA Congress in Dublin back in the days, which will hopefully return soon,  when we were allowed to drink, eat and make merry. One evening we had a great craic at the Merry Ploughboy, and one of the songs was "Those Were the Days" by Mary Hopkin - Those Were The Days - 1968 - YouTube

On the coach back to the hotel, I re-wrote the lyrics to pen a "Ballad to Last Look". May it bring a smile over the festivities, and I am still looking for a singer to perform it!

Once upon a time there were platforms
Where we used to take a last look or two
Remember how we programmed for hours
And dreamed of all the great things we could do
Those were the days my friend
We thought they'd never end
We'd last look and reject forever and a day
We'd trade the way we choose
We'd last look and never lose
For we were market makers and sure to have our way.
La la la la……………..
Then the profit years went rushing by us
Some lost their ethical notions on the way
As we took a last look while in the tavern
We'd highlight the better spreads and we'd say
Those were the days my friend………………..
Just today I stood before the cavern
Nothing seemed the way it used to be
In the glass I saw a strange reflection
Was that last looker really me
Those were the days my friend…………………
Through the door came compliance and change
I saw the Global Code heard the death knell to our fame
Oh my friend we're older and practices have changed
But in our hearts last look was still the same
Those were the days my friend
We thought they'd never end
We'd last look and reject forever and a day
We'd trade the way we choose
We'd last look and never lose
For we were market makers and sure to have our way.
La la…………………..