Senior foreign exchange industry executives are set to meet to explore how they can change culture on trading desks and various alternatives to benchmarks in order to wade off the possibility of regulation of the industry. This follows widespread allegations that traders colluded to manipulate a key benchmark rate.
A Friday meeting in Sydney of industry officials and central bank representatives will involve discussing the various alternatives available to the practice of setting benchmark exchange rates in a 60-second window when huge volumes of trades are done, a source told Financial Times.
The forum will also analyze the codes of conduct normally used either as a model for member’s internal policies or industry standard. Most of the attendees are drawn from the main financial centers such as New York, London, Australia, Canada and Frankfurt.
The meeting comes on the wake of highly-publicized investigations by over 15 regulatory authorities in four continents over allegations that dealers in major banks conspired to rig foreign exchange benchmarks. This has seen 11 banks, including the Bank of England, fire or suspend over 31 employees in connection with the scandal. This has seen some quarters call for the regulation of the $5.5 trillion-a-day industry.
This has forced WM/Reuters, one of the preferred fixings provider, to mull changes to its approach as its competitors line up alternatives (ICAP, an interdealer broker, launched an electronic fixing service this week). However, some people have questioned the continued use of fixings as they create room for manipulation.
The meeting will review the Model Code of the ACI, its umbrella body, and conduct a “health check” to check its relevance. This is after intense scrutiny of the industry’s ethical standards following the reputation-crushing scandals.
To contact the reporter of this story; Yashu Gola at Yashu@forexminute.com