Code of Ethics for foreign exchange market eyed before yearend

FILE: BSP Governor Nestor A. Espenilla, Jr. at the launch of financial literacy program for schools, in partnership with the DepEd Philippines and BDO Foundation. (Photo: Bangko Sentral ng Pilipinas/Facebook)

MANILA — Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla Jr. is optimistic that a code of conduct for the foreign exchange market in the country can be established by yearend to ensure fairness and integrity in trading.

More central banks worldwide has implemented a similar move.

On May 25, 2017, the Bank for International Settlements (BIS) released the publication entitled FX Global Code for the wholesale foreign exchange market. The publication, a tie-up between central banks and market participants, is aimed at recommending standards on ethics, governance, execution, information-sharing, risk-management and compliance.

Espenilla said the central bank has released a position paper on the issue and is awaiting feedbacks from market participants. “We put out a position paper and we like them to comment on that. Now we’re discussing what are the details of it,” he said.

Espenilla said he is hopeful that they would be able to finalize discussions and have the code before the year ends.

He said the code, the implementation of which will be led by a BSP oversight group, will enable the Philippines to be in line with international reforms on the rules and practices.

“Each jurisdiction should see how it can adopt (their own rules),” he said.

The central bank chief said this is also part of the BSP’s foreign exchange liberalization. “Ideally, the industry should govern itself but the reality (is that) the industry is afraid to call out each other,” he said, citing that this is part of market participants’ responsibilities.

Espenilla said the proposed code of ethics “doesn’t prevent speculation.”

“Position-taking is not prohibited but they have to be transparent about their reporting to the BSP,” he added.