The FX Global Code: transcending symbolism?

Abstract

Following two years of negotiations, a pivotal public–private partnership has released a global code of conduct for the foreign exchange industry. Designed to address a trust deficit within and, more significantly, between it and society, the code enunciates key principles of expected behaviour with global application. While ostensibly voluntary and lacking explicit enforcement mechanisms, the foreign exchange (FX) Global Code has a number of innovative features that warrant attention. It explicitly prohibits activity subject to recent negotiated prosecution agreements in the UK, the USA and enforceable undertakings in Australia. Moreover, the (forced) recruitment of financial firms embeds common conceptions of practice within and across institutional actors by leveraging a shaming mechanism. The imaginative component is matched, however, by an almost complete lack of media and academic attention. This, it is argued, is a mistake. The reform initiative is the most significant yet in changing the culture of wholesale markets precisely because of how it interlocks with law and policy within key markets and questions prior enforcement decisions.