A refresher course in good behavior is being provided by traders in the $5.1-trillion-a-day currency market.
How the document’s 55 principles will affect their jobs on a daily basis were weighed by market participants was highlighted in the publication of the FX Global Code last week. The 55 principles were crafted by industry leaders and central bankers as part of a global cleanup effort.
The answer is a sweeping educational initiative for Citigroup Inc., the world’s largest currency trader. Dovetailing with the recommendations set out in the new handbook, the bank has trained about 1,300 staff globally on market conduct in the past few years. Offering its roughly 9,000 members a way to take tests on the standards, the ACI Financial Markets Association has unveiled an online portal. Eventually, the training will be available via mobile app.
“We have spent a lot of time, energy and money implementing changes,” Itay Tuchman, Citigroup’s London-based global head of foreign-exchange trading, said by phone. “It is a core objective of ours to rebuild the faith and trust in our industry.”
After a rate-rigging scandal that unfolded in recent years led to combined fines of about $10 billion for a group of banks, including Citigroup, the voluntary guidelines aim to root out such misconduct.
The major central banks have pledged to adopt the framework and expect their foreign-exchange counterparties to follow suit and the 75-page code is the culmination of a two-year effort steered by the central banks.
Guy Debelle, deputy governor of the Reserve Bank of Australia, who led a group of central bankers in developing the standards said that most market participants will probably incorporate the code into business practices within a year.
“We want to be known as a market leader to champion good practice,” said Tuchman at Citigroup, which signed a statement committing to the code upon its release. “If we do that, our business will be better off.”
According to Mike Lawrence, global chief administrative officer for foreign exchange and local markets, the bank has incorporated the principles into its operations.
In a program that includes about 70 specific examples, Citigroup trained employees on market conduct through classes in 20 countries and electronic courses. Designed to detect potentially inappropriate behavior, the bank also built monitoring tools.
To test and certify knowledge of the principles, more than 200 questions, tailored to individual roles, that market participants can use, are included kin ACI’s training. Target scores for employees can also be set by companies using ACI’s system.
The fixing scandal is still reverberating across the industry for all the efforts to promote best practices.
According to people with knowledge of the situation, set to agree on deals to surrender to U.S. officials, are three British currency traders charged with conspiring to manipulate markets. For its involvement in currency manipulation, BNP Paribas SA was fined $350 million last week.
“I hope and believe that the industry will adhere to the code, but in a market as global and diverse as foreign exchange, there will probably still be some bad apples,” said Dan Marcus, chief executive officer of trading venue ParFX. While adopting the principles will probably add to costs across the industry, “it’s very hard to argue against them.”
(Adapted from CNBC)