RBI renews statement of commitment to global code on best market practices

The FX Global Code, developed under Bank for International Settlements, Basel, compiles the practices formulated by central banks worldwide

The Reserve Bank of India has renewed its statement of commitment to the FX Global Code, which is a compilation of best market practices formulated by central banks worldwide.

“RBI continues to support the principles of good practices within the Code. RBI had also facilitated the formation of India Foreign Exchange Committee (IFXC) to promote adoption and adherence of the Code among FX market participants in India,” the RBI said through a press release on Wednesday.

The FX Global Code has been developed under the auspices of the Bank for International Settlements, Basel.

The FX Global Code was initially launched in May, 2017. Subsequently, after a holistic review, an updated code was published by the Global FX Committee on July 15, 2021, the RBI said.

“The Code is applicable to the Wholesale FX market participants covering sell-side, buy-side and financial intermediaries, and is voluntary in nature. The Code does not impose any legal or regulatory obligation and is intended to be a supplement to the local laws, rules and regulations,” the RBI said.

At present, the code is being implanted across the world by the Global FX Committee in coordination with Local FX Committees in each jurisdiction.

According to a statement on the website of the Global FX Committee, the purpose of the code is to promote a robust, fair, liquid, open, and appropriately transparent market.

The code aims to facilitate effective transactions at competitive prices which reflect available market information for a diverse set of market participants.

In May, 2017, the Bank of Korea, the Hong Kong Monetary Authority, the Monetary Authority of Singapore, the Reserve Bank of Australia and the RBI had jointly welcomed the publication of the code.

“Given the increasing volume of FX activity taking place in Asia, they encourage all market participants based in their jurisdictions to adhere to the principles of the Code,” read the joint statement in May 2017.