Corporates and their treasury departments are likely to benefit in the long term from the introduction of a new global conduct code for the FX market, according to finance experts. Drafted over two years by a global FX Working Group (FXWG) – led by Reserve Bank of Australia deputy governor Guy Debelle – the code aims, in his words, to “promote a robust, fair, liquid, open and transparent market”. To mark the FX Global Code’s 25 May publication, Debelle released a statement in which he reminded stakeholders why the document needs to exist. “The FX industry has been suffering from a lack of trust,” he said. “This lack of trust is evident both between participants in the market and, at least as importantly, between the public and the market.” That market, he noted, “needs to move towards a more favourable and desirable location, and allow participants to have much greater confidence that the market is functioning appropriately”. With that in mind, he added, “The Code sets out global principles of good practice in the FX market to provide a common set of guidance… This will help to restore confidence and promote the effective functioning of the wholesale FX market.” At present, the Code is voluntary, rather than compulsory. However, it sets out very specific definitions of the types of participants that are expected to follow its recommendations. One of those types is clearly defined as “a corporate treasury department [or Centre] entering into external (non-group) transactions, either on its own account or on behalf of the parent companies, subsidiaries, branches, affiliates or joint ventures of the group it represents”. Speaking to The Wall Street Journal in the wake of the Code’s launch, risk management specialist Mark O’Toole – vice president for treasury solutions at OpenLink Financial – noted: “More transparency and more information will lead to corporates getting better FX pricing.” In the same article, London-based KPMG partner Karim Haji said that the Code “should lead to more efficiency, enabling companies to conduct FX transactions and currency hedging at lower costs”. Meanwhile, Alvarez & Marsal managing director Ian Tyler predicted that, as the Code beds in over the coming years, firms will announce in their annual reports whether or not they are sticking to it. That question of adherence has also been high in the FXWG’s thoughts. In a separate statement, David Puth – CEO of prominent trading firm CLS and head of the FXWG’s Market Participants Group – said: “It is now up to each of us to follow through with our commitment to adopt the principles that we have established. “I am extremely confident that those who wish to compete in this market will be more successful if they follow the principles that we have established together.” Find the full FX Global Code here.