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Central banks agree new rules for FX market conduct

Traders work on the floor of the New York Stock Exchange.
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Traders work on the floor of the New York Stock Exchange.

Banks must prevent traders sharing order information under a new global code of conduct that bans traditional slang usages and gives dealers more guidelines for what they can and cannot say about the world's biggest financial market.

The 8-page document, seen by Reuters, is part of efforts to head off future abuses after two years of scandal over market manipulation.

It was agreed this month by the foreign exchange market committees run by all of the developed world's major central banks.


It will sit as a global guide on top of the existing codes approved by each committee and also instructs asset managers to work harder at ensuring they are getting the best deal they can on currency transactions for their clients.

"FX market 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 document, dated March 12, said.

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Two years of regulatory investigations that have led to several billion in fines for banks have quashed the constant chatter of a market traditionally keen on relationship-building and conversations on phones, in bars and over electronic chats.

The code seeks to categorize confidential information and provide more guidance on what dealers and participants can say to each other about the market, particularly around orders submitted for execution in daily benchmark fixing sessions.

"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 or counter-party, including around a fix," it said.

"It is acceptable to share with customers a view on the general state of and trends in the market. However, any market color given regarding market activity should be sufficiently aggregated and anonymized so as to not disclose FX Trading Information or Designated Confidential Information."