Minutes of the London FXJSC Legal Sub-Committee Meeting - 4 March 2021

The Bank of England chairs the London Foreign Exchange Joint Standing Committee (FXJSC) Legal Sub-Committee. The FXJSC is made up of market participants, infrastructure providers and the UK financial regulators.
Published on 17 June 2021

Minutes

Date: 4 March 2021 | Time: 3pm – 5pm | Location: Video meeting

Item 1 – Introduction and Minutes

The minutes of the meeting of 10 November 2020 were approved.

Item 2 – Diversity & Inclusion in the FX market: Meeting Varied People Event

Sumita Ghosh (Bank of England) updated members on some of the Bank’s key Diversity and Inclusion initiatives and upcoming Meeting Varied People (MVP) event and workstream. Sumita highlighted that diversity and inclusion is a top strategic priority for the Bank of England; some of the initiatives highlighted included inclusive and pooled recruitment; career progression through mentoring and promoting opportunities through specialised sponsorship programmes; the ‘Bank Ambassadors’ programme of school talks; valuing differences and diversity of thought, as well as championing wellbeing and resilience.

The MVP event, due to take place on 21 April 2021, aims to diversify the Bank’s market intelligence external contacts and supporting more diversity among Markets’ committee membership, as well as a pipeline of diverse talent to further encourage market-wide diversity. In addition to keynote speeches from Bank presenters, it will include a structured networking event in which members will be encouraged to participate.

Item 3 – Legal and regulatory update

Timothy Cant (Ashurst) outlined some of the legal and regulatory issues for FX markets coming up in 2021. Timothy discussed some of the regulatory issues counterparties were encountering post-Brexit, including issues such as the status of spot-FX versus FX-derivatives, and how booking of connected FX hedging is managed from London for EU debt offerings. Practical and regulatory considerations were emerging from new asset classes such as stablecoins, where issuers faced issues centred on whether they are a security, a payment transaction or a form of e-money. Timothy gave an overview of the likely impact on FX markets of Environmental, Social and Governance (ESG) principles, expecting an increased interest by fund managers insofar as requirements give rise to duties and obligations when investing in ‘ESG’-linked assets or hedging related FX liabilities with broker-dealers. Finally, Timothy outlined some regulatory initiatives in the EU relevant to FX markets, including some ‘quick fixes’ to ameliorate COVID 19 disruption, such as ESMA’s temporary suspension of the MiFID II ‘best execution’ reporting requirement under RTS 27; ESMA’s consultation on MiFIR transparency for non-equity instruments (which affects FX swaps); and the Market Abuse Regulation (MAR) review report in which ESMA anticipated further analysis of spot-FX.

Item 4 – Global FX Committee and FX Global Code 3 year review

Grigoria Christodoulou of the FXJSC Secretariat provided feedback from the GFXC meeting on 8 December 2020 , and an outline of the future workplan. The key focus at the meeting was progressing the FX Global Code (Code) 3-year review by undertaking a public consultation on the main changes proposed to the Code text in or around April 2021. The GFXC also discussed what their expectations would be for Market Participants updating their Statements of Commitment following the publication of the updated Code later this year. Details on progress from the five Code 3-year review working groups (WG) were provided, which cover:

  • anonymous trading (where discussion had focussed on transparency of data policies; cross-venue credit-checks; tag management; and identification of Code signatories on venues);
  • disclosures (development of ‘disclosure cover sheets’ for liquidity providers and venues);
  • algorithmic trading and transaction cost analysis (where specific Code changes had been identified);
  • settlement risk (strengthening the existing text on managing settlement risk); and
  • execution principles (with proposals to provide guidance around ‘riskless principal’, ‘pre-hedging’ and ‘last look’ activity).

Item 5 – Any other business

The next meeting would be on a date to be announced

Attendees

Sharon Blackman (Chair) – Citigroup

Jonathan Grant (Secretary) - Bank of England

Jateen Shah - Bank of America

Gaynor Wood – CLS

Simon Goldsworthy - Deutsche Bank

David Harris - Financial Conduct Authority (FCA)

Harkamal Singh Atwal – HSBC

Tamsin Rolls - JP Morgan

Baljit Saini – NatWest

Rakesh Shah - Standard Chartered

Simon Helm - TP ICAP

Sunil Samani - XTX Markets

FXJSC Secretariat

Paul Avanzato – Bank of England

Kirsty Bell - Bank of England

Guest attendees

Sumita Ghosh - Markets Intelligence & Analysis Division, Bank of England

Tim Cant – Ashurst

Grigoria Christodoulou (GFXC Secretariat) – Bank of England

Apologies

Nasia Pachiti Pallikaropoulou – Barclays

Dan Parker - Goldman Sachs

Diane Bouwmeester - LCH

Nimisha Kanabar - Morgan Stanley

Richard Lamb - UBS

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