By Isaac Cohen*
The global foreign exchange (FX) market is one of the biggest in the world. According to the 2016 Triennial Central Bank Survey, by the Basel based Bank for International Settlements, in April 2016, trading in FX markets reached an average of $5.1 trillion per day. To appreciate the magnitude of this hard to imagine figure of daily transactions, according to the World Trade Organization, in 2015, the current dollar value of world merchandise exports reached $16 trillion and the dollar value of world commercial services exports reached $4.7 trillion. Therefore, at $20.7 trillion in a year, the amount of both global merchandise and commercial services exports is transacted in four days in the global market for foreign exchange.
The Deputy Governor of the Reserve Bank of Australia Guy Debelle, at a press conference in London last week, announced that a working group of central banks had completed the drafting of a FX Global Code. The reason why this task was carried out, said Deputy Governor Debelle, was because “the foreign exchange (FX) industry has been suffering from a lack of trust” and participants should “have much greater confidence that the market is functioning appropriately”.
The new Code contains a set of principles, instead of a set of rules, to form part of the market participants’ procedures manuals. It covers the following areas: ethics, information sharing, execution, confirmation and settlement (bis.org/mktc/gc_may16pdf).
*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media. Former Director, UNECLAC Washington.