The Global Foreign Exchange Committee (GFXC) completed its review of the FX Global Code – with the December 2024 version superseding the July 2021 version – receiving greater support from market participants. 
The new version updates its principles of good practice in the foreign exchange market in two key areas. Alongside the revised code, GFXC stated that it will also publish enhanced Disclosure Cover Sheets (DCS) for liquidity providers and platforms.
The code was updated following an extensive consultation process with local FX committees (LFXCs) globally as well as a wide range of market participants through a public request for feedback in October 2024.
At the time, however, the Foreign Exchange Professionals Association (FXPA) labelled the updates “well-intentioned but flawed”, namely due to the overly complicated language used in the proposals and the lack of practical detail.
Read more: FX association calls out proposed FX Global Code revisions for ‘complexity and lack of clarity’
Following the consultation process, updates have been made to five of the code’s 55 principles to strengthen guidance around FX settlement risk and increase transparency around certain FX transactions and the use of client data on electronic trading platforms.
Elsewhere, the DCS for liquidity providers and platforms were also extended, aiming to improve transparency and comparability across providers on the use of FX data.
“We welcome the code’s continued emphasis on mitigating FX settlement risk via PvP [payment vs payment] mechanisms and automated netting solutions, using the ‘risk waterfall’ concept as a best practice approach,” said Marc Bayle de Jessé, chief executive at CLS.
“The principles outlined in the code are critical for reducing systemic risk while enhancing resilience and efficiency in the global FX market.”
As part of the updated FX Global Code, it becomes essential for trading platforms to disclose how they use data from client transactions, especially with respect to order handling, fees, and post-trade reviews.
Elsewhere, there has been an establishment of a “hierarchy of settlement methods” and a risk waterfall approach, to tackle settlement risk.
“The updates to the global FX code are a significant step forward in enhancing transparency and reducing risk in FX markets. It is now incumbent upon firms to use the next 12 months to implement the available solutions to facilitate PvP settlement,” said Alex Knight, head of EMEA at Baton Systems.
“Even where PvP settlements aren’t yet available, most firms still have an opportunity to deploy technology to further de-risk their business through the use of real-time information to track and orchestrate settlements in a controlled manner, and to reduce the volume of business that is settled gross.”
Firms have been given a “sufficient” 12-month period by the GFXC to comply with these changes, which have been created with the aim of improving transparency, efficiency, and risk mitigation in FX markets.
Following the code review, GFXC chair, Gerardo García, commented “there has been strong GFXC support for the final proposals of the FX settlement risk and FX data working groups.
“The code amendments clearly address the concerns that market participants and LFXCs expressed during the review process and are consistent with the objective of having a more robust and transparent FX market.”
Basu Choudhury, head of trade lifecycle strategy at OSTTRA, highlighted that the updated FX Global Code “rightly prioritises” the mitigation of settlement risk and liquidity –which he noted as pressing challenges within the FX market.
“We see this as a pivotal moment to ensure market participants not only manage settlement risk but also optimise their FX liquidity comprehensively,” he said.
“Only by integrating tools to facilitate full visibility of exposures from point of execution with effective netting protocols and intraday FX PvP can firms be empowered to navigate future FX settlement challenges with greater confidence and precision.”