The Global Code of Conduct in the Foreign Exchange Market

In the foreign exchange market where diverse participants transact across borders, it is crucial to enhance confidence in the market globally for effective functioning of the market. In July 2015, the BIS established the Foreign Exchange Working Group (FXWG) to facilitate the development of a single global code of conduct for the foreign exchange market (the Global Code) and to promote greater adherence to the Global Code. Since its inception, central banks including the Bank of Japan and private-sector professionals from around the world have been working closely together to complete the Global Code by May 2017. The first phase of the Global Code and Principles for Adherence to the Global Code were released in May 2016 by the FXWG. The Global Code is principle-based instead of detailed and rule-based, and therefore takes into account the diversity of market participants, while reinforcing discipline to prevent misconduct. The Bank of Japan believes that market participants should fully understand and adhere to the principles underlined in the Global Code, which will contribute to sound development and effective functioning of the foreign exchange market.