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The past summer saw the first major update to the FX Global Code that was introduced in 2017. SEB, together with the central banks in Scandinavia, continues to participate actively in developing the code.

Currency trading is highly complex, and by nature both global and always open, in contrast to trading in equities, for example, which is conducted on stock exchanges with set opening and closing hours or other securities that are traded in more local markets in various ways.

Prior to 2017 there existed a wide range of regional guidelines for the foreign exchange (FX) market, but uniform and clear global standards were lacking.

"The lack of uniform guidelines was a concern both for market participants and supervisory authorities around the world. Moreover, an international code that applies for all types of market participants – banks, companies, institutions and providers of market infrastructure – was certainly needed," says Svante Hedin, Deputy Head & Chief of Staff for FICC Markets (Fixed Income, Currencies & Commodities).

Therefore, in 2015 a few central banks were first to take the initiative to develop such a global code. Additional central banks soon joined the initiative, along with several commercial banks and other institutions with large FX operations. In the Nordic countries this work was coordinated by Riksbanken, with SEB participating by virtue of its position as a leading bank in this area in the region.

"We are highly supportive of this initiative and have been deeply engaged in the work from the very start," says Svante Hedin. "That also includes contributing to the updated code that was published this past summer."

In the updated version, there is clearer guidance on for example anonymous and algorithmic trading, transaction cost analysis, dealing with conflicts of interest, disclosures and settlement risk. The plan is to review the code roughly every three years.

Since 2017 the concrete work with the code is being conducted within the framework of the Global Foreign Exchange Committee, on which SEB continues to be a member. More than 1,100 market participants have formally signed their adherence to the code, including central banks in countries such as China, US, Japan, UK, Brazil and the European Central Bank, as well as essentially all of the world’s 50 largest FX banks. Many other market participants, such as companies and asset managers, have also signed their commitment to the code.

"We are eager to see more market participants adopt and adhere to the code, and together with Riksbanken and the other Scandinavian central banks we are working actively for this to happen in our region," says Svante. "It’s a matter of providing information in various ways to the participants of the foreign exchange market."

The FX Global Code is not a formal set of regulations issued by the authorities, but more of a self-regulation framework. Many supervisory authorities are nevertheless using it as a yardstick for best practice in the foreign exchange markets.

Svante Hedin notes that the code also links to the bank’s sustainability work in two ways:  "In part we want to contribute to a sustainable and robust financial market. In addition, it’s a matter of ensuring that the markets function and are governed with open and well-working processes."

Read more at Global Foreign Exchange Committee web site