FSB proposes recommendations on forex fix: FSB has published a consultation report on foreign exchange benchmarks. It asks for comments by close of business on 12 August. FSB's draft recommendations to eliminate opportunities and incentives for dealers to try to influence foreign exchange benchmarks include:

  • development of a global/central utility for order-matching;
  • widening the fixing window;
  • introducing alternative benchmark calculations (such as volume or time weighted) and calculated over longer time periods;
  • fixing windows should no longer be centred on the hour, to prevent news releases from disrupting the fixing process;
  • investigating the feasibility of receiving price feeds and transactions data from a broader range of sources;
  • central banks should comply with the relevant principles where their reference rates are intended for transaction purposes;
  • fixing transactions should be priced in a transparent manner (such as via the bid-offer spread);
  • banks should establish internal guidelines and procedures for collecting and executing fixing orders;
  • market-makers should not share information with each other about their trading positions beyond that necessary for a transaction;
  • market-makers should not pass on private flow information to clients or other counterparties;
  • banks should establish internal systems and controls to address conflicts of interest arising from managing customer flow;
  • codes of conduct should detail when information sharing between market-makers is or is not allowed;
  • market participants should prove compliance with the codes of the various foreign exchange committees, as well as their internal codes of conduct;
  • index providers should review whether the foreign exchange fixes used in their calculation of indexes are fit for purpose; and
  • asset managers should conduct appropriate due diligence around their foreign exchange execution.

(Source: Foreign Exchange Benchmarks)