A raft of banks and regulators all over the world have shown support for a new set of principles whose aim is to promote sound practice in the foreign exchange market.

The FX Global Code was “developed to provide a common set of guidelines to promote the integrity and effective functioning of the wholesale foreign exchange market,” the Global Foreign Exchange Committee said last week.

The 78-page document does not impose legal or regulatory obligations on market participants, nor does it replace regulation.

“It is intended to serve as a supplement to any and all local laws, rules, and regulation by identifying global good practices and processes,” the document stated in its foreword.

The code comes as regulators and legal authorities continue to crack down on malpractice in the foreign exchange markets. Several banks and former traders have been penalised and, in the case of some junion personnel, incarcerated as a result of crooked trading practices.

Several regulators and banks, including the UK's Financial Conduct Authority, the Monetary Authority of Singapore, the Hong Kong Monetary Authority and the Bank of Korea, have welcomed the code.

The MAS stated last week: “The BOK, the HKMA, the MAS, the Reserve Bank of Australia and the Reserve Bank of India strongly support the principles of good practices within the code and will be engaging local market participants to promote adherence to 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.”

Meanwhile, the UK's FCA said: “Standards can be a useful way for the industry to police itself in support of our regulatory work and can help firms to communicate expectations of individuals when linked to the senior managers and certification regime.

“Firms have already begun work to ensure their FX businesses satisfy the principles of the FX Global Code. Firms can help to promote the wide adoption of the code by expecting their FX counterparties also to take steps to adhere to the code as it applies to them.”