Marshall Bailey, President, ACI – The Financial Markets Association, comments in response to proposals by UK Chancellor George Osborne to reform the foreign exchange market…
George Osbourne’s leadership is very welcome and this is the right direction to restore the reputation of the FX market. This will do much to reassure markets, investors and the public. The FX market must evolve and learn the lessons from recent events.
Foreign exchange is the largest and most liquid market in the world. It is a global market that is integral to the flow of global business and commerce, but its reputation and integrity has been tainted in recent months.
London is at the heart of the global FX system and it is good to see the UK lead on reform where it is needed. Action taken here will have a global impact.
It is important that we strengthen oversight in the global foreign exchange market with a balanced, effective and co-ordinated approach which avoids the unintended consequences.
While the market’s structure is broadly very effective and well designed, we have a duty to the global financial system to ensure we repair where needed.
A coordinated international response is the right approach, as regional regulation could drive trading institutions away to less-stringent jurisdictions.
It is also critical that we instill a common set of ethics and a consistent code of conduct to support any regulatory and infrastructure changes.
A globally agreed standard of guidelines and best practices ensures consistent standards are applied across financial markets. This should be backed up by appropriate regulation or legal systems that can deal with any malfeasance.
