London maintains its grip on global FX market

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London has become a hub for Chinese yuan trading and continues to solidify its role at the centre of the global FX markets – even with the spectre of Brexit looming on the horizon – according to the latest data from the Foreign Exchange Joint Standing Committee (FXJSC).

Chaired by the Bank of England, the FXJSC’s semi-annual turnover survey is considered a benchmark for the health of the UK’s wholesale FX market. The numbers for the six-month period leading up to October 2018 were published earlier this week and showed a sharp 17% rise in yuan turnover compared to the April 2018 results.

In particular, USD/CNY turnover increased to a staggering $73 billion per day, its highest absolute turnover to date, and overtook EUR/GBP as the seventh most traded currency pair in London. The UK government has made a concerted effort to promote yuan trading since its internationalisation began and the FXJSC numbers indicate that the hard work is now paying off, according to Pragma Securities, an algorithmic trading technology provider.

This marks a notable moment for what is arguably the most important emerging currency to the global economy. By promoting free use of the yuan, the Chinese monetary authority is enabling Chinese corporates and financial institutions to develop their businesses overseas, which in turn is leading to a continued rise in the currency’s market share.

FX – the largest and most interconnected of global markets – is the crowning jewel of London’s financial services industry and the City is a natural hub for the yuan as it continues its path to internationalisation.

More broadly, the FXJSC survey pegged average daily UK FX turnover at USD 2,611 billion in October 2018, the third largest turnover figure on record for the survey. While this represents a fall of 4% from the record high of $2,727 billion reported in April 2018, it still makes for promising reading in the uncertain macroeconomic and political climate.

In particular, FX spot activity rose to $775 billion, its highest level since April 2015 and a year-on-year increase of 11%. This growth in spot activity was also seen in data released by the Fed in New York, and is reflective of the bouts of volatility which spurred higher trading volumes on electronic platforms such as ParFX.

With the March 29th Brexit deadline fast approaching, the UK could find itself in a very different position when the results of the next FXJSC survey are published, but the signs look overwhelmingly positive for the UK maintaining its tight grip on the global FX market.

FCA unveils first steps to a ‘global fintech sandbox’

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The UK Financial Conduct Authority (FCA) announced the launch of the Global Financial Innovation Network (GFIN), a new alliance to encourage the growth of fintech globally.

The GFIN is part of the FCA’s plans to formally create a “global sandbox”, an idea it first discussed in February. A sandbox allows companies to test new, innovative products that are not protected by current regulation or supervised by regulators, reducing the time and cost of getting products to market.

The new ‘global fintech sandbox’ will involve a collaborative effort with watchdogs from around the world including the US Consumer Financial Protection Bureau, the Monetary Authority of Singapore and the Hong Kong Monetary Authority. It aims to help regulators stay ahead of the new wave of emerging technologies.

Over the past few years, watchdogs have seen the rapid rise of data analytics, the advancement of technologies such as AI and the creation of new securities such as ICOs. Under GFIN, a fintech will be able to carry out tests in different countries at the same time to solve common cross-border problems such as data protection, KYC and anti-money laundering.

The UK has established a reputation for being at the forefront of the fintech revolution and received more investment in its fintech sector than any other country in the world during the first half of 2018.

Regulators have demonstrated their commitment and willingness to work side-by-side with fintechs; the FCA was the first regulator to create a domestic sandbox in 2016, while the Bank of England has completed proof of concepts with start-ups such as enterprise software firm R3. It also launched its own Fintech Hub in March 2018.

This subsequently led to calls for a global sandbox, which received near-unanimous approval from regulatory bodies all over the world.

It is important to note, however, that not everyone believes in the importance of regulatory sandboxes. The chief of New York’s financial regulatory body said on Tuesday that the agency is “fiercely opposed” to the U.S. Treasury Department’s recent endorsement of regulatory “sandboxes” for fintech firms. Superintendent Maria T. Vullo said, “the idea that innovation will flourish only by allowing companies to evade laws that protect consumers, and which also safeguard markets and mitigate risk for the financial services industry, is preposterous.”

It will be interesting to see whether the initiative will achieve its aims and whether financial services regulators will effectively collaborate to balance the potential benefits of innovation with their traditional policy objectives.

Chatsworth welcomes this positive collaboration between regulators and aspiring fintechs, both domestically and internationally, as this gives companies a safe environment to test new ideas and learn how to effectively scale their business concepts. We would encourage fintechs, investors, governments, and other interested parties to participate in the consultation process to ensure it is transparent and fair to potential firms wishing to apply for cross-border testing.

UK Remains at the Forefront of the Fintech Revolution

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Despite fierce competition, the UK remains at the forefront of the fintech revolution according to the ‘Finance for Fintech’ report, launched recently by London Stock Exchange Group and TheCityUK.

The independent survey, carried out by YouGov, interviewed over 400 fintech companies across eight countries, all of which have had at least Series A funding rounds or above, and provided interesting insights into the global fintech scene.

Bullish UK fintech scene

UK fintechs are bullish about their growth prospects.

The research highlighted that fintech companies operating in the UK expect to grow by 88 per cent over the next three years, 8% higher than the overall average.

Vital to this growth is raising finance and this process is reportedly more straightforward for UK fintechs in public markets than those operating in other countries, making it an attractive location for fast-growth companies. Chancellor Philip Hammond recently supported this view, pointing out that investment in UK fintech more than doubled last year, outpacing the funding of EU rivals such as Germany.

Interestingly, fintechs surveyed placed the UK as the third best  location for businesses seeking to grow their international footprint, only behind the US and China.

Fintech Revolution in Europe?

That said, competition is heating up.

Europe increasingly seeks to strengthen its position as a regional fintech hub. On 8 March, the European Commission announced an action plan on how it will do just that; new rules that will help crowdfunding platforms to grow across the EU’s single market.

The impact of this will be interesting as one of the primary barriers to fintech growth is competition according to 43% of those surveyed.

Regulation

Fintechs require a supportive global regulatory environment to flourish.

You have to applaud the FCA’s exploration of a potential global regulatory sandbox following the success of its UK version. The UK version, launched in 2016, helped fintechs to test innovations with real customers in the live market but under controlled conditions.

The global sandbox could allow firms to conduct tests from London into different jurisdictions at the same time, enabling regulators to collaborate to solve cross-border problems.

This has the potential to strengthen London’s position as a destination for global fintech companies as they can come from all around the world to test their products and find out how they can expand internationally.

Fintech is by definition without borders.

The research shows that fintechs across the world are becoming increasingly cross-border in their growth aspirations with 72% of the 400 companies surveyed planning to expand into new countries. 73% believe they will need to move into new or develop existing market sectors in order to achieve this growth and almost three-quarters believe long-term growth will be driven, at least in part, by new technologies.

It is worth noting that those who have reached Series D rounds or above have the biggest appetite for expansions and anticipate achieving a monumental growth of 320%.

While fintechs seek global expansion, it is important they don’t lose sight of the importance of being located close to the core financial hubs as crossover will, by and large, determine their success.

It is clear that in order for fintechs to thrive and continue to transform the global financial services sector, they need access to finance, a supportive global regulatory environment and proximity to the global financial services sector. The UK currently offers all three.

The report demonstrates that while the UK remains at the forefront of the fintech revolution, it must continue to innovate and work collaboratively in order to maintain its leading position, especially with Europe hot on its heels.

 

For daily updates from Chatsworth Communications follow us on Twitter.

SWIFT and CSD community advance blockchain for post-trade

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SWIFT and seven central securities depositories (CSDs) have signed a Memorandum of Understanding (MOU) to work together to demonstrate how distributed ledger technology could be implemented in post-trade scenarios, such as corporate actions processing, including voting and proxy-voting.  The group will investigate the types of new products that can be built using it, and how existing standards such as ISO 20022 can support it.

Abu Dhabi Securities Exchange, Caja de Valores, Depósito Central de Valores, Nasdaq Market Technology AB, National Settlement Depository, SIX Securities Services and Strate Ltd are among the CSDs participating in the DLT project with SWIFT. Additional CSDs are expected to join in the coming weeks.

“To ensure interoperability and smooth migration, it is crucial that new technologies support existing common standards such as ISO 20022,” says Stephen Lindsay, Head of Standards at SWIFT. ““ISO 20022 is a messaging standard but also defines terminology across asset classes and corporate actions. An agreement on using the same set of definitions and concepts is important, as they will be independent of the technology or data format.”

Chatsworth was the first communications agency to focus on fintech. We’ve been building fintech reputations for 20 years, steering start-ups through launch, growth and onto corporate action, and protecting and enhancing established infrastructures.

Looking for intelligent, informed and connected fintech PR which delivers results and value?

Get in touch and let us help build your reputation and tell your story

Mosaic shortlisted for fintech company of the year by City AM

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Congratulations to the Mosaic Smart Data team which has been named in this year’s top five fintech companies in the City AM awards.

The awards celebrate the best of The City in an aim to identify ‘the most bold, successful, and principled companies and individuals’ of the year. The fintech category recognises some of the most innovative British fintech successes, and celebrates London’s role as one of the world’s centres of fintech excellence.

Mosaic Smart Data CityAM

Mosaic was shortlisted as one of the top five categories by City AM’s editorial staff who, announcing the shortlist in the daily paper, described it as “one of the best financial services tech innovations of recent times”.

With financial institutions facing a challenging period in FICC markets, Mosaic allows banks to see how their entire FICC business is performing in real time and help traders identify much-needed liquidity in FICC markets.

As the volume of data linked to trading activity and interactions with clients increases, the challenge to harness and analyse that data in real time becomes ever more critical. Mosaic Smart Data understands that the true value of data comes not only from the intrinsic individual data streams themselves, but also from the correlations and inferences that can be drawn from the aggregated data from each client.

Its cutting-edge technology addresses the challenges facing institutions trading in today’s FICC markets, including change management, productivity, efficiency, restructuring and the growing automation of trading processes.

The final winners of the City AM awards will be chosen by a panel of prestigious judges from the world of business, including Virgin Money boss Jayne-Anne Gadhia, WPP’s Sir Martin Sorrell and Sky News’ highly experienced City Editor Mark Kleinman.

We wish Mosaic the best of luck for the awards ceremony, which will be held on 9th November at Grange St Paul’s Hotel.

Chatsworth was the first communications agency to focus on fintech. We’ve been building fintech reputations for 20 years, steering start-ups through launch, growth and onto corporate action, and protecting and enhancing established infrastructures.

Looking for intelligent, informed and connected fintech PR which delivers results and value?

Get in touch and let us help build your reputation and tell your story

SWIFT and Chatsworth leading the debate at SIBOS, 2017

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The Chatsworth team is proud to be supporting SWIFT at SIBOS, the world’s premier financial services conference, exhibition and networking event. What started out as a banking operations seminar in 1978, has grown into the premier business forum for the global financial community to debate and collaborate in the areas of payments, securities, cash management and trade.

Organised by SWIFT for the financial industry, Sibos has brought financial leaders together, over four decades, to network, collaborate and make sense of changes in the industry, helping to build an understanding of the forces affecting the financial community. 

 SWIFT is all about connectivity. The organisation remains the world’s leading provider of secure financial messaging services, providing a platform for messaging, standards for communicating and products and services to facilitate access and integration; identification, analysis and regulatory compliance.

 The organisation connects more than 11,000 banking and securities organisations, market infrastructures and corporate customers in more than 200 countries and territories. Headquartered in Belgium, SWIFT’s international governance and oversight reinforces the neutral, global character of its cooperative structure.

 The Chatsworth team will be in attendance throughout the event in Toronto, where the team will be working to support SWIFT in highlighting the challenges facing the financial eco-system and how their connectivity and experience can help. Chatsworth’s CEO will also be moderating some of the panel debates.

Get in touch

Email: [email protected]   

Twitter: @chatsworthcomms

We look forward to seeing you there. 

Compliance stream at Sibos will explore rapidly changing geopolitical and financial crime environment

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Experts and regulators to address the new normal in sanctions, counter-terrorist financing, anti-money laundering, fraud, and cyber security

Sibos introduces a stellar line-up throughout the Compliance stream at this four-day event in Toronto. Multiple sessions will address the profound impact of the shifting geopolitical, financial crime, and cybersecurity environment. Panel debates and deep-dive sessions will cover topics such as the future of financial intelligence sharing; counter terrorist financing in the ‘lone wolf’ era; the potential of artificial intelligence to improve sanctions and AML compliance; and the fraud and cyber-crime ‘new normal’.

An ‘in conversation’ panel with Wolfsberg Group members will unveil the coming year’s priorities and trends. A Latin America-focused panel will provide an overview of the region’s banking compliance challenges.

Notable speakers participating in this year’s Compliance Forum include:

  • Jennifer Calvery, Global Head of Financial Crime Threat Mitigation, HSBC
  • James Freis, Chief Compliance Officer, Clearstream Banking
  • William Fox, Managing Director Global Head of Financial Crime Compliance, Bank of America Merrill Lynch
  • Neil Isford, General Manager, Watson Financial Services Solutions, IBM
  • David Lewis, Executive Secretary, FATF
  • Jerry Perrullo, Chief Information Officer, ICE
  • Denise Reilly, Wolfsberg member, Global Head of Anti-Money Laundering, Citi

Must-attend sessions include:

Counter-terrorist financing- are we really stopping the bad guys – 17 October at 9:30

Panelists will explore how can banks – and governments – adapt to stay one step ahead of the bad guys, what is working and what needs to work better, and whether stringent regulations are pushing legitimate actors outside of the financial system without actually preventing acts of violence.

Fraud and cyber high alert: The new normal? – 18 October at 9:30

As high-profile security breaches continue to reverberate, this panel discussion of experts from a range of industries will discuss the benefits gained from collaboration, the landscape of payment risks, and the skills that must be developed and recruited to protect institutions and the industry.
“In conversation” with Wolfsberg – Pressing priorities and trends 18 October at 15:30

A lively discussion with Wolfsberg representatives will discuss the industry’s latest challenges, trends, and the coming year’s priorities.

Read more about the Compliance stream on Sibos.com.

The Sibos streams enable attendees to build their Sibos agenda around the topics of interest to them.

Other Sibos Streams and Tracks include:

Banking

Technology

Securities

Standards Forum

Artificial Intelligence

About Sibos

Sibos is an annual conference, exhibition and networking event organised by SWIFT for the global financial industry. Next month, some 7,000 decision makers and topic experts from financial institutions, market infrastructures, multinational corporations, and technology partners gather in one place to do business and collectively shape the future of payments, securities, cash management and trade.

When: Monday 16 October – Thursday 19 October 2017

Where: Metro Toronto Convention Centre (MTCC)

Website: www.sibos.com

Contact: JoAnn Healy | [email protected] | +1 212 455 1802

Get your complimentary Sibos Press Pass today

Accredited journalists are welcome to attend Sibos free of charge. To obtain your complimentary press pass for Sibos 2017 Toronto, contact: [email protected].

Don’t miss your chance to be right in the middle of the news at the premier financial services event of the year.

Follow us on Twitter: @Sibos #Sibos

Follow us on LinkedIn: www.linkedin.com/company/Sibos

Financial services and the fintech opportunity

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A new report from the Bank for International Settlements (BIS) claims that fintech can improve both financial stability and access to services, but requires significant changes in regulation in order to flourish.

This sector has exploded in recent years, with banks, regulators and VCs throwing their weight (and money) behind a huge range of start-ups. The BIS has waded into the debate with a well-researched paper assessing the potential impact of fintech on the financial services industry.

Despite financial services readily adopting technological innovations which have transformed other industries (such as the internet and automation technologies), the cost of managing assets has stayed almost unchanged in 130 years.

In a working paper entitled ‘The Fintech Opportunity’, the BIS explores why operating costs in finance remains so surprisingly high, and how regulation creates barriers to further innovation which could bring down costs.

The fintech opportunity

While there is substantial analysis about how regulation has impacted the financial services sector over the past decade, we think the most interesting section of this report relates to how a new breed of fintech companies can be nurtured.

Fintech startups seek to disrupt the status quo with innovative solutions to new and existing problems. The paper argues that regulators could take advantage of the fintech movement to achieve some of the goals that have so far remained elusive.

There are huge opportunities to be gained from this. The key advantage of startups is that they are not held back by existing systems and are willing to make risky choices. In banking, for instance, successive mergers have left many large banks with layers of legacy technologies that are, at best, partly integrated.

The provides the opportunity for fintechs to build the right systems from the start. Moreover, they share a culture of efficient operational design that many incumbents do not have.

There are, however, many challenges to overcome. This includes the ability to correctly forecast the evolution of the industry, encouragement or interest from potential customers that can result in viable, widespread adoption, preventing a new company being swallowed up by incumbents and making sure that the new system does not create new inefficiencies or suffer from the flaws of incumbents.

Four guiding principles

The onus is on regulators to provide the right environment and incentives if they want fintechs to flourish.

The paper suggests four guidelines for regulators to consider:

  • Encourage entry and beware of a narrow approach to level-playing-field
  • Promote low leverage from the beginning
  • Keep incumbents in check with high equity ratios and be mindful of acquisition
  • Perfect is the enemy of good

These guidelines are discussed at length by the author, and we encourage you to read about them here.

But what’s interesting is that the guidelines do not require regulators to forecast which technology will succeed or which services should be unbundled, nor require regulators to force top-down structural changes onto powerful incumbents.

The reality is that no one knows when the ‘Uber’ of wholesale financial services will emerge or what it will look like. What we do know, however, is that a combination of restrictive regulations and powerful incumbents can certainly prevent entry.

While there have been promising fintech companies emerging across a range of sectors, creating and maintaining an environment that fosters creativity and innovation, and balancing this with systemic risk controls, is crucial for both financial stability and access to services.

Chatsworth was the first communications agency to focus on fintech. We’ve been building fintech reputations for 20 years, steering start-ups through launch, growth and onto corporate action, and protecting and enhancing established infrastructures.

Looking for intelligent, informed and connected fintech PR which delivers results and value?

Get in touch and let us help build your reputation and tell your story

ECB publicly endorses FX Global Code

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The European Central Bank (ECB) has become the latest central bank to endorse the Bank of International Settlements’ (BIS) FX Global Code, joining others including the New York Federal Reserve and the Reserve Bank of Australia. This signals that currency-trading institutions who do not sign up may well find their counterparties limited in future.

Whilst the ECB did not issue a legal mandate for its currency market counterparties to sign up to the Code, market participants have been invited to publicly declare commitment to the Code by May 2018, one year on from its publication. It is clear that the central banks are taking the Code very seriously, and rightly so.

The Code sets out a comprehensive set of best practice guidelines which outline how all market participants, regardless of institution type, should behave in order to uphold the highest standards of transparency and ethics in the wholesale FX market.

Since the final version of the Code was published two months ago, many institutions have already committed to adopting it. Those that haven’t will likely be spurred into action by the ECB’s firm encouragement.

This advocacy for an important set of principles is to be welcomed.

Bank of England to boost fintech by opening up RTGS

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The Bank of England (BoE) announced a framework to open up its interbank payment system to fintech firms.

The UK interbank payments landscape is currently dominated by CHAPS, a same-day sterling settlement service used to transfer large amounts between businesses, as well as for property purchases.

CHAPS’s central position in the market, processing 92% of interbank payments, however, represents a degree of risk to financial stability. In 2014, the system was suspended for several hours due to technical problems. This resulted in payments being held up and caused delays for house buyers as payments were not processed on time.

Newer fintech companies and challenger banks are also concerned that they will be at a disadvantage when working with the company, as it is owned by the UK’s four biggest banks.

In response to these concerns, the Bank of England last year announced a plan to widen access to its real time gross settlement (RTGS) payment service, the system which enables large sterling transfers on a real-time basis. This will allow non-banks to bypass systems like CHAPS and access a range of payment services directly from the BoE.

This week, the Bank took the next step with the release of a detailed technical framework for how the new system will operate.

Under the plans, a payment service provider (PSP) will be given access to the RTGS system) if it can demonstrate appropriate anti-money laundering checks and can keep customers money safe.

The Bank hopes this new approach will relieve some of the financial stability pressures from CHAPS, while giving smaller PSPs more confidence in their payment service relationships.

The move is a further boost to the growing retail fintech sector. Combined with the European Union’s second payment services directive (PSD II) next year, it will help to put these companies on a more even footing with their bigger competitors and open up competition in retail banking services.

With greater access to customer data through PSD II, and the ability to transfer large payments in real time, fintechs will now be able to compete far more effectively with their larger rivals.

The effect could be to push greater innovation from both banks and fintech companies. This can only be a good thing for end users.

Cybersecurity: Is a flaw in human psychology to blame?

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A fascinating analysis of cybercrime and cybersecurity this week from Michael Daniel, the president of The Cyber Threat Alliance.

Writing in the Harvard Business Review, Mr Daniel postulates that we have only just begun to comprehend the scale of the issue and that it is our perception of the online world versus the physical which is to blame.

Cyberspace operates according to different rules than the physical world and is more than just a technical problem, but is as much about economics and human psychology.

“The borders in cyberspace don’t follow the same lines we have imposed on the physical world –  they are marked by routers, firewalls, and other gateways. Proximity is a matter of who’s connected along what paths, not their physical location. The same principles of cyberspace that allow businesses to reach their customers directly also allow bad guys to reach businesses directly”

He poses six key framework questions which he argues need answering before we can effectively tackle the problem:

  • What is the right division of responsibility between governments and the private sector in terms of defence?
  • What standard of care should we expect companies to exercise in handling our data?
  • How should regulators approach cybersecurity in their industries?
  • What actions are acceptable for governments, companies, and individuals to take and which actions are not?
  • Who is responsible for software flaws?
  • How do we hold individuals and organisations accountable across international boundaries?

In our experience, financial firms which are typically hyper-competitive are highly adept at solving industry issues when they recognise the group threat and work together.

Co-operation and co-ordination across borders backed by resolve, human capital and investment is key to solve these issues is critical.

The financial systems, both systemically and at the individual firm level, remain at risk and it is clear that any system is only as strong as its weakness link.

London’s post-Brexit future as a financial hub

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UK Prime Minister Theresa May finally triggered the formal process for Britain leaving the European Union (EU) on March 29.

While the EU referendum and a post-Brexit scenario may have been something of a blow to confidence in the City, it still has plenty going for it as a financial hub. This year’s Global Financial Centres Index, an international ranking of the world’s leading financial centres, placed London top of the pile.

“London’s rating has been influenced by not knowing what will happen after the UK’s departure [from the EU],” Mark Yeandle, associate director of Z/Yen and author of the report, told The Financial Times. Despite this, London remains top of the list and, over the period which the report tracks, has even recovered some ranking points.

London also remains the world’s biggest FX market by a huge margin, according to the latest BIS Triennial report. While Brexit may result in some jobs being relocated, the industry still believes London will remain front and centre and a key financial hub.

One of the key factors which will insulate London’s FX market is its concentration of trading infrastructure and activity. “When trading becomes concentrated in a particular region and is supported by a comprehensive legal and regulatory environment it develops natural strengths that enable that particular market to function well.” says Dan Marcus, CEO of ParFX, talking to Finance Magnates. “By leaving that pool of liquidity, a firm could disadvantage themselves and their clients.”

This means that, far from vacating the city, many businesses are investing further in London’s future.

Algorithmic trading technology provider Pragma is one such company, with the New York-based firm expanding its equities and FX business to London. “Our investment in the data center at Equinix’s LD6 site offers Pragma360 clients access to state-of-the art technology and the largest ecosystem for foreign exchange trading globally,” says Pragma’s Chief Business Officer, Curtis Pfeiffer.

“Despite the uncertainty caused by Brexit, we are moving forward with this large capital expenditure because London, as the largest FX trading centre in the world, hosts the largest datacentre ecosystem for low-latency FX trading applications and we do not see that changing any time soon,” he explains.

While nothing in the negotiations has been determined at this early stage, the City will also weigh up the potential challenges of Brexit.

Continued access to the European single market through financial passporting and the ability to attract skilled technology professionals from across the EU to work in London top the list for many institutions.

“77% of my staff in London were born outside the UK. We need those people. People are very mobile. I just worry that tough negotiations will send the wrong signal.” Michael Kent, CEO of remittance service Azimo, told Financial News.

In addition, J.P. Morgan has reportedly spent the last nine months weighing up various EU cities as a potential new continental home for their operations, according to The Wall Street Journal.

Looking beyond the headlines, however, the picture is more nuanced. Most of the relocation plans announced over the past few months involve relatively small numbers of staff. For many banks and financial institutions this may be a hedging exercise rather than a wholesale exodus.

Going forward, the UK government is determined to ensure London remains a central part of the international financial landscape, and it’s worth remembering London has a number of strategic advantages which mean it is likely to continue to be the city of choice. It uses the global language of business, English; it is situated in the perfect timezone between Asia and America; and has a legal system that is world-renowned for clarity and reliability.

None of this will change; in fact, it will continue to ensure London remains open and attractive to business.

Adherence to FX Global Code will reform conduct and behaviour

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As we near the final stages of the development of the foreign exchange (FX) Global Code, the ACI Financial Markets Association (ACIFMA) is leading efforts to support education and adherence. We will start by making commitment to the Code mandatory for ACIFMA members, and encourage members to prove their adherence in future. This could prove to be a turning point in reforming conduct and behaviour in foreign exchange, writes Brigid Taylor in FX Week.

As a member of the MPG, ACIFMA has both contributed and witnessed the extent to which market participants and policymakers have engaged, discussed, debated and worked together in the best interests of the wider market. This is an industry that transacts more than USD5 trillion of currencies across borders every single day. Its ability to operate smoothly is crucial to the international economy.

There was of course a broad range of views on how best to address a series of topics, such as governance, information sharing, last look and pre-hedging. An array of views is expected in any large consultation, but consensus has been achieved with the best interests of the market in mind.

The final Code will, in my view, outline principles and guidance that is effective, appropriate and strike the right balance. I expect it to act as an essential reference for market participants when conducting business in the wholesale FX markets and when developing and reviewing internal procedures.

Hardwiring adherence – the third objective

This brings us to the final objective set out at the beginning of the process: develop proposals to promote and incentivise adherence to the Code.

For this to happen, it is essential that individuals (i) commit to adhering to the Code; (ii) receive the appropriate training and education so they are clear on what is expected and understand how to comply; and (iii) sign up to a solution where senior managers are able to observe and address any training and educational gaps amongst their subordinates.

This is where the ACI Financial Markets Association (ACIFMA) can play a central role. With a track record in delivering training, education, attestation and best practice principles that stretches back more than half a century, we represent more than 9000 individuals in 60+ countries.

There are several ways we intend to achieve this. Firstly, we will make it a prerequisite for individuals to commit to adhering to the FX Global Code as part of their membership. This means a meaningful proportion of the market – over 9,000 FX professionals around the world – will sign up immediately after the code is launched and commit to understanding, implementing and abiding by the new principles.

There is an urgent need to restore ethics in financial markets and the FX market is aware of its responsibilities to its clients and stakeholders. The significance of the enormous effort undertaken over the past three years should not be underestimated; to date, the level of leadership and engagement has been exemplary. I expect the FX Global Code to be a turning point in reforming conduct and behaviour in foreign exchange and develop a renewed sense of trust in this important sector of any economy.

To read the full article by Brigid, please visit the FX Week website here.

Financial lobby group release blueprint For UK post Brexit

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TheCityUK’s report sets out its vision for the UK’s financial and professional services industry following the Brexit vote.

The outcome of the Brexit vote left the UK’s financial and professional services sectors evaluating their future relationship with the European Union (EU) and how these crucial industries could navigate any short-term uncertainty to continue their historic and longstanding relationships with key trading partners.

Unsurprisingly, the importance of maintaining access to the European single market through passporting mechanisms topped the list as a key requirement. But it also stressed the need to be aware of, and explore, opportunities beyond Europe, with Chinese and Indian markets representing strong growth opportunities.

London is already well placed to cement trading relationships with developing economies around the world. The UK remains the global leader in fixed income, currencies and commodities (FICC) and demonstrated its position of strength in the global foreign exchange market by executing around $2.15 trillion in the six month to April. Moreover, it remains the second largest centre for debt financing globally after the US and recently surpassed Singapore to become the second largest offshore RMB clearing centre.

Overall, the report identifies five broad goals for London to work towards:

1. Connect globally by maintaining an effective UK-EU relationship and sustain market access, while also strengthening ties with developed economies and emerging markets (China and Indian).

2. Drive national growth by building on its strong national footprint and create more connected regional centres with specialist skills and expertise in areas such as emerging technology, middle and back-office.

3. Expand its services and retain its position as the global leader in areas such as capital markets, legal services and infrastructure financing.

4. Innovate, disrupt and scale: continue to harness the momentum gained in London’s burgeoning FinTech sector to see the UK become a centre of excellence and a natural home for the next generation of financial and professional services.

5. Build skills and attract talent through developing local talent, whilst retaining access to a diverse and global workforce with next-generation skills.

The full  CityUK report can be viewed here.