30 March 2015

Global Preamble: Codes of Best Market Practice and Shared
Global Principles1

The wholesale foreign exchange (FX) market is a global market used by banks and other institutions,as well as personnel representing both banks and non-banks (together, the “FX market participants”).
Some of these participants transact directly in the market, while others may access the market
indirectly through other institutions. Trading spans roughly six days per week, twenty‐four hours per
day and takes place in various financial centres. Across these financial centres, FX market participants
must abide by the laws and regulations relevant to their FX activity.

Further, different codes(“Codes”) have been developed and/or employed by foreign exchange committees in different regions
as set out below, in order to promote best market practices and high standards of conduct andprofessionalism, and to encourage fair, liquid, transparent and accessible FX markets. These Codes
typically have no statutory underpinnings but they may refer to legal requirements, ordinances orregulations which are binding in applicable jurisdictions. In addition, organisations such as the Bankfor International Settlements (BIS) and the Financial Stability Board (FSB) 2 may also issue
recommendations and guidance relating to the management of risk associated with FX transactions.
All FX market participants are expected to be familiar with the Codes applicable to their business andto behave in a manner consistent with the guidance contained within them (the “Guidance”). In doing
so, FX market participants should take into account both the letter and spirit of the Guidance. Further,FX market participants are expected to review and incorporate the Guidance into their individual firm
policies and procedures (collectively, the “FX Policies”)3. These policies should provide sufficientguidance, including examples where appropriate, for staff to be able to distinguish between acceptableand unacceptable conduct in a variety of situations they may encounter. In order to raise awareness
1This version supersedes the Codes of Best Market Practice and Shared Global Principles published by thevarious Foreign Exchange Committees in 2013.
2In February 2013, the Basel Committee on Banking Supervision published its “Supervisory Guidance forManaging Risks
Associatedwith theSettlementof Foreign Exchange
Transactions”:
http://www.bis.org/publ/bcbs241.htm. On 30 September 2014, the FSB published the final report “ForeignExchange
Benchmarks”
preparedbyits
ForeignExchange
Benchmarks
Group:
http://www.financialstabilityboard.org/publications/r_140930.htm
3Additionally, FX market participants should design such policies and procedures to facilitate compliance withany laws and regulations applicable to their FX activity.

1and compliance by relevant personnel with the FX Policies, a program should be established for thetraining of such personnel on the FX Policies. FX market participants should also consider, as
appropriate, adopting a process by which relevant managers periodically attest to the supervision of
their staff with respect to compliance with the FX Policies.
While certain aspects of the Guidance may be less relevant to participants who are not acting as
market makers (such as smaller participants that do not engage in FX transactions on a regular basis),
it is nonetheless important that they are aware of the Codes (and the Guidance therein) in order to set
appropriate expectations for their interactions and relationships with their counterparties.
Additionally, these participants should similarly seek to be in compliance with those elements of theGuidance that are relevant to their FX activity.
The Guidance seeks to incorporate all elements of the FX transaction process from pre-trade to posttrade activities. While the Codes have distinctive features based upon local factors in different regions,
there is broad recognition that the FX market transcends regional borders. Accordingly, the various
Foreign Exchange Committees around the world seek to work together to enhance communicationand coordination, to share information on Committee initiatives and projects, and to exchange
perspectives on developments and trends in the global FX market. In addition, in order to promote
more robust risk management practices among global FX market participants, there is shared support
for certain high-level principles which are set out in this document and underpin the existing Codes(and the Guidance therein) promulgated by the various Committees.

For example, FX market participants are expected to have systems and controls in place to:develop and promote a strong culture of ethical behaviour and standards of conduct;promote awareness and use of general dealing practices, procedures and conventions;ensure accurate and timely pre‐trade preparation and trade capture;support robust and efficient back office operations including confirmation, netting, payment
and settlement; and

mitigate risk in FX transactions from the point of initial discussion regarding a potential
transaction to settlement.

This document is intended to provide a harmonised, global view on high-level principles and is notintended to replace the individual codes established and adopted by the committees as described
below. While the global “high-level principles” aim at a comprehensive coverage, financial markets
are constantly evolving as a result of new products, processes and technologies. FX market
2participants are advised to apply the global “high-level principles” set out in this document to the FX
market as it evolves, including with respect to new FX products, processes and technologies.

The Foreign Exchange Committees in Hong Kong, London, New York, Singapore and Tokyo eachproduce and maintain their own Codes. The Australian Foreign Exchange Committee and the ECB
Foreign Exchange Contact Group, along with a number of other regional groups, endorse the ACI
Model Code. For further information on any of the regional Codes and for more specifics on thecomplete guidance provided by each individual code, please see the links below:
ACI ‐ The Financial Markets Association
ACI Model Code
http://www.acifma.com/model-code
Hong Kong Treasury Markets Association
Code of Conduct and Practice
http://www.tma.org.hk/PubFile/tmacode.pdf
London Foreign Exchange Joint Standing Committee
The Non‐Investment Products Code
http://www.bankofengland.co.uk/markets/Documents/forex/fxjsc/nipscode1111.pdf
New York Foreign Exchange Committee
Guidelines for Foreign Exchange Trading Activities
http://www.newyorkfed.org/FXC/2010/tradingguidelinesNov2010.pdf
Management of Operational Risk in Foreign Exchange
http://www.newyorkfed.org/fxc/2013/BestPracticeReview2013.pdf
Singapore Foreign Exchange Market Committee
The Singapore Guide to Conduct and Market Practices for Treasury Activities
http://www.sfemc.org/blue.asp
Tokyo Foreign Exchange Market Committee
Tokyo Code of Conduct
http://www.fxcomtky.com/coc/code_of_conduct_e2013.pdf
The following foreign exchange committees collaborated in the drafting of this statement:
Australian Foreign Exchange Committee
Canadian Foreign Exchange Committee
ECB’s Foreign Exchange Contact Group
Hong Kong Treasury Markets Association
London Foreign Exchange Joint Standing Committee
New York Foreign Exchange Committee
Singapore Foreign Exchange Market Committee
Tokyo Foreign Exchange Market Committee3

Laws, Regulations, and Guidance
As stated in the Preamble, FX market participants must abide by laws and regulations relevant to their
FX activity. In addition, FX market participants are also expected to incorporate applicable Guidance
into their individual policies and procedures and to establish the training program described in theGlobal Preamble. Moreover, FX market participants should consider, as appropriate, adopting theattestation process for personnel described in the Global Preamble.

Personal conduct
FX market participants should adopt high standards of conduct in their actions and communications,both internally and externally. FX market participants are also expected to conduct their business withdue skill, care and diligence, and to act in good faith.
Personnel with supervisory responsibilities should ensure that those reporting to them haveappropriate knowledge and expertise to carry out their FX activities, as well as to comply withrelevant laws, regulations, and Guidance, all of which will require appropriate education and ongoingtraining with respect to FX Policies. Such training should contain practical examples and guidance on
how FX Policies should be applied specifically to their FX business.
Moreover, such personnel must embed an appropriate risk culture within the firm, taking into accountthe letter and the spirit of the Guidance. In doing so, FX Policies should clearly describe the personal
conduct standards that have been adopted, whether such standards are embodied in law, regulation, orGuidance, against which the FX market participant and its personnel will be held accountable. The FXmarket participant or any of its personnel may be held accountable for any breach of FX Policies that
violate fair market practices, damage the reputation of the FX market participant and profession orundermine the integrity of the FX market. In particular, FX market participants should have FX
Policies and surveillance mechanisms in place to cover personal conduct and behaviour, which may
include subjects such as dealing for personal account, entertainment, gifts and gambling. The FX
Policy of a FX market participant containing its personal conduct requirements should transcend
individual businesses and activities such that these standards apply even as FX businesses andtechnologies evolve.
FX market participants are responsible for having effective policies, processes and controls in place inorder to ensure that business is in fact conducted within the framework of applicable personal conduct
requirements. For example, remuneration policies tied to conduct should be in place. FX market
participants are also expected to have processes to deal with individuals who have acted
inappropriately, including reporting requirements to the relevant authorities where applicable.
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Individuals should be encouraged to ask their supervisor or other designated personnel for guidance inthe event that there is any uncertainty regarding their conduct obligations.
FX market participants should also have in place effective escalation procedures that enable
individuals working for such FX market participants to report instances of suspected unlawful orinappropriate practices and ensure that issues surfaced through this channel are addressed promptlyand transparently. Individuals working for FX market participants should feel confident that any
information reported under these procedures will be dealt with seriously and effectively, and that thereporting will not be to their detriment. FX market participants should be accountable for the integrityof these policies and for ensuring the protection of staff that make such reports.

Confidentiality and market conduct
FX market participants should have appropriate measures in place to protect the anonymity of both
the FX trading activity and identities of their FX trading counterparties. There is a general expectationby all FX market participants that information relating to their trading activity or positions (“FXTrading Information”) will not be shared by their trading counterparties with any external parties
unless such information (a) is disclosed to agents, market intermediaries (such as brokers and tradingplatforms) or other FX market participants involved in, or facilitating, the execution, processing,clearing or settlement of the transaction, (b) is reported, as may be required (and as not otherwise
prohibited) under relevant law, rule or regulation, to market infrastructure providers (such as traderepositories or central counterparties), (c) is disclosed with the consent of the counterparty or
customer, (d) is requested by a relevant regulatory or public authority or is otherwise required to be
publically disclosed under applicable law, rule or regulation, or (e) is disclosed to advisors orconsultants with the understanding that they hold the information in the same manner.
In addition, FX market participants may agree to a higher standard of non-disclosure with respect toconfidential, proprietary, and other non-public information of their FX trading counterparties(“Designated Confidential Information”) which, at their discretion, may be formalised in a written
non-disclosure or similar confidentiality agreement. In such case, the circumstances under which FX
market participants may disclose Designated Confidential Information will be governed by applicablelaw and the terms of the confidentiality agreement.
Proper treatment of FX Trading Information and Designated Confidential Information is essential forupholding market professionalism and integrity. FX market participants should have appropriate
measures in place, including policies and procedures, to protect such information in accordance withthe standards described herein, both within the FX market participant and externally.
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All market participants’ personnel have a duty to obey the requirements of their institution’s FX
policies and all the relevant laws and regulations governing trading on non-public information andother market abuse in their jurisdiction. FX market participants, therefore, should not, with intent or
through negligence, profit or seek to profit from the misuse of Designated Confidential Information orFX Trading Information, however obtained, or collude with others to make a profit or seek to make aprofit by misusing such information. “Misuse” of Designated Confidential Information or FX
Trading Information occurs when a party utilises such information in a manner that is not permitted
by law or regulation or under their internal policies or contractual obligations where applicable.
Subject to the above-mentioned duties, laws and regulations, FX market participants may engage inappropriate market making and risk management activities, including sourcing liquidity inanticipation of customer needs or hedging or mitigating exposure resulting from a client order. Underno circumstances should FX market participants use individual trade and position information of acounterparty or customer with the intent of adversely affecting the interests of that counterparty orcustomer.
FX market participants have the obligation to ensure that:

there are well documented policies and procedures in place and sufficient systems andcontrols to protect FX Trading Information within the dealing environment and other areas ofthe market participant which may obtain such information, and that personnel have been
trained with respect to such policies. These policies should also prohibit counterparty andcustomer anonymity from being circumvented through the use of slang or pseudonyms, both
externally and internally.



their personnel have been trained to identify Designated Confidential Information
appropriately in accordance with internal policies and procedures including the manner inwhich such information must be handled, and to deal appropriately with situations that requireanonymity and discretion.

the communication technologies (for example, telephone, e-mail, chat room and othercommunication tools) used to transmit FX Trading Information and Designated Confidential
Information are reasonably designed to be secure, monitored and protected against
unauthorised access. Appropriate steps should be taken to prevent the leakage of suchinformation through various kinds of communication technologies.

 any misuse of FX Trading Information or Designated Confidential Information is investigatedpromptly according to a properly documented internal procedure.
FX market participants should not share information with each other about their trading positions orindividual trades with clients or other FX market participants beyond that necessary for the execution
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of a transaction and subsequent transaction life cycle events, ensuring that no confidential information
is disclosed. Furthermore, FX market participants should not pass on FX Trading Information to other
FX market participants that might enable those entities to anticipate the flows of a specific client orcounterparty, including around a fix. It is acceptable to share with customers a view on the generalstate of and trends in the market (often referred to as providing market colour). However, any market
colour given regarding market activity should be sufficiently aggregated and anonymised so as to notdisclose FX Trading Information or Designated Confidential Information. It is not acceptable todisclose information on individual trades, specific counterparty names and other non-public
information, except in accordance with the standards set out above regarding FX Trading Information
or Designated Confidential Information.
Finally, FX market participants should exercise careful judgment in assessing whether any
information they receive (including, but not exclusive to, counterparty information) is true andaccurate. FX market participants should have policies that require their personnel to refrain frompassing on information that they know or suspect to be misleading. Such policies should bereasonably designed to ensure that any communication, whether to counterparties, customers, othermarket participants or other external parties have a reasonable basis, are fair and balanced, and do notcontain any inaccurate or misleading information. These policies should also include thecircumstances in which it may be acceptable to inform customers about a rumour prevalent in themarket, and the requirements as to how that communication should be handled.

Policies for execution practices
FX market participants should put in place clear internal guidelines and procedures regarding theirexecution practices. FX market participants should not engage in any practices which could be held toconstitute market manipulation, abuse, fraud, or anti-competitive behaviour.

Where FX market

participants are handling orders, whether for counterparties or customers, they should establish andenforce their internal systems, processes and procedures to address potential conflicts of interest
arising from managing such order flow.
All firms should identify any potential or actual conflicts of interest that might arise when undertaking
FX transactions, and take measures either to eliminate these conflicts or control them so as to ensure
the fair treatment of counterparties. Practices that would (a) undermine the reputation of both thetraders and FX market participants for which they work and (b) potentially expose parties to legalrisks should, in each case, be well understood and avoided to the extent possible.
When a market participant agrees to act as an agent on behalf of (and not a principal trading
counterparty to) a customer, the market participant should not enter into a transaction which they7

know, or ought to have known, would result in a conflict of interest to that customer, unless suchconflict is disclosed to the customer, the customer consents to it and, if applicable, it is resolved inaccordance with local law, rules, and/or regulations.
In accordance with the FSB’s Foreign Exchange Benchmarks Report’s recommendations, FX market
participants should establish and enforce their internal guidelines and procedures for collecting andexecuting fixing orders. If a firm engages in fixing transactions, those transactions should be priced ina manner that is transparent and is consistent with the risk borne in accepting such transactions.
Finally, FX customers (including asset managers passively tracking an index) should conduct
appropriate due diligence around their foreign exchange execution, including assessing the suitabilityof FX reference rates used, and be able to demonstrate that to their own clients if requested.

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