A group of policymakers and global foreign exchange (FX) industry players have adopted a new code of conduct that aims to bring standards to FX trading in the wake of market-manipulation scandals.

The new voluntary code of conduct for global FX markets aims to set standards for ethics, governance, execution, information sharing, risk management and compliance in the wholesale FX markets. A committee of central banks and industry firms also announced the creation of the Global Foreign Exchange Committee to help oversee the new code.

“The FX Global Code sets good practices for market participants to follow and will support a robust, fair and transparent market, underpinned by high ethical standards,” says Agustín Carstens, governor of the Bank of Mexico and chairman of the Governors of the Global Economy Meeting (GEM), in a statement.

“Central banks are strongly committed to supporting and promoting adherence to the code,” says the Bank for International Settlements in a statement. “They confirm that they intend to adhere to the principles of the code, and will expect the same of their regular FX counterparties, except where this would inhibit the discharge of their policy functions. Additionally, members of central bank sponsored foreign exchange committees will be expected to adhere to the code.”

The central banks are also calling on industry firms to bring their FX trading practices in line with the principles of the code and to support its adoption.

In addition, a collection of FX industry committees from major financial centres — including Canada — issued the following statement in support of the code: “These principles, while not rules or regulation, are important to promoting the integrity and effective functioning of the FX market.”