A new global code of conduct should help to restore confidence in the foreign exchange market, Reserve Bank Assistant Governor Guy Debelle says.
The foreign exchange (FX) industry has suffered from a lack of trust, Dr Debelle said in a short speech to launch the first phase of the Global Code of Conduct for the Foreign Exchange Market in New York on Thursday.
The breakdown in trust had been both between participants in the market as well as between the public and the market, he said.
The new code should set out which practices are acceptable and which are not.
"This should help to restore confidence and promote the effective functioning of the wholesale FX market," Dr Debelle said.
The first stage code has been developed by a working group set up by the Bank for International Settlements and chaired by Dr Debelle.
"This first phase covers areas such as ethics, information sharing, aspects of execution and confirmation and settlement," he said.
"The second phase will cover further aspects of execution including e-trading and platforms, prime brokerage, as well as governance, and risk management and compliance."
As well as drafting the new code, the committee has been considering how to ensure widespread adoption of it.
"Clearly, that has been an issue with the various existing codes that have been in place in a number of markets over many years," Dr Debelle said.
"It is evident that they were ignored on occasion, wilfully or otherwise."
The new code, to be finalised with the second stage in May 2017, will not be imposed by law or regulation, Dr Debelle said.
"But we do expect the principles in the Code to be understood and adopted across the entire FX market."
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