Professional Markets Study: risk, regulation and ethics

01

The professional standard: the FX Global Code

In simple words

A football league has a rule book for the referee, but the clubs also sign a promise about fair play: no cheating, no secret deals, tell the truth. The FX Global Code is like that fair-play promise for the big currency market. It is not the law, but serious players sign up to it.

Before this course: Macro & Market Structure: rates, flows and liquidity (course 5.6.3). You can already explain policy rates, data surprises, real rates and forwards, the balance of payments, who trades FX and where, the LBMA Gold Price auction, and liquidity stress. This course moves from "how the market works" to "how professionals are expected to behave in it, how risk is controlled, and how to teach and review others".

Key facts

The FX Global Code is "a set of global principles of good practice in the foreign exchange market". Its aim is to promote the integrity and effective functioning of the wholesale FX market.
It was developed by a working group of central banks under the BIS Markets Committee, with a Market Participants Group. A first part was published in May 2016 and the complete Code in May 2017.
It is maintained by the Global Foreign Exchange Committee (GFXC), set up in May 2017 as a forum of central banks and private sector participants. The latest update listed on the GFXC site is December 2024.
It is not a law. The Code says it "does not impose legal or regulatory obligations" and does not replace regulation. Firms must still follow the laws of every place where they do business.
The Code has 55 principles, organised around six leading principles:

Leading principle	What is expected (in short)
Ethics	Behave ethically and professionally to support a fair market
Governance	Clear responsibility and oversight of FX activity
Execution	Care when negotiating and executing trades
Information Sharing	Clear, accurate communication and protection of Confidential Information
Risk Management and Compliance	A strong control environment to identify, manage and report risks
Confirmation and Settlement Processes	Robust, timely post-trade processes

Principle 1 asks participants to act honestly, fairly and with integrity. It gives duties to firms, to managers and to individual staff, who should report or escalate concerns.
A firm can show it supports the Code by signing a Statement of Commitment. The GFXC also links to public registers where such statements are listed.

Step by step

Open globalfxc.org by typing the address yourself and find the FX Global Code page.
Write the date of the latest update shown on the page.
Copy the six leading principles into a table with one line each in your own words.
Write one sentence on why the Code is "good practice" and not law.
Find the Statement of Commitment page and write in one sentence what a firm uses it for.
Check: you can name all six leading principles from memory and say who maintains the Code.

Watch on YouTube

A central banker explains the FX Global CodeReserve Bank of Australia · YouTube · youtube.com

Videos by other creators on YouTube, for reference. They are not made by or affiliated with The Future Market.

LESSON 01The professional standard: the FX Global Code

LESSON 01 / ANIMATED LESSON / AI VOICE00:00 / 01:05

Voice

Read the video script

[Host] "The currency market trades trillions a day. Who sets the standard of behaviour?"
[Text on screen: FX GLOBAL CODE: 55 principles] "Central banks and market firms wrote the FX Global Code: fifty-five principles of good practice."
[Text on screen: Ethics | Governance | Execution | Information | Risk | Settlement] "They sit under six leading principles."
[Text on screen: NOT A LAW] "It is not a law. It sits on top of each country's rules."
[Text on screen: Statement of Commitment] "Firms show they back it by signing a Statement of Commitment."
[Host] "Learn the six headings. Every lesson in this course hangs on them."

Try it now

Make a one-page "Code map": the six leading principles, one plain-English sentence each, and one example of good or bad behaviour you can imagine for each (made-up, no real firms).

ClaudeStuck? Copy a ready-made prompt for Claude

Copy this, open Claude, paste it, and Claude will walk you through the lesson step by step.

For a grown-up: Claude is for adults (18+). Copy this, paste it into Claude, and use the answer to explain the lesson to your child.

I'm learning "Professional Markets Study: risk, regulation and ethics" on The Future Market. Lesson 1: "The professional standard: the FX Global Code".

What the lesson teaches:
- The FX Global Code is "a set of global principles of good practice in the foreign exchange market". Its aim is to promote the integrity and effective functioning of the wholesale FX market.
- It was developed by a working group of central banks under the BIS Markets Committee, with a Market Participants Group. A first part was published in May 2016 and the complete Code in May 2017.
- It is maintained by the Global Foreign Exchange Committee (GFXC), set up in May 2017 as a forum of central banks and private sector participants. The latest update listed on the GFXC site is December 2024.
- It is not a law. The Code says it "does not impose legal or regulatory obligations" and does not replace regulation. Firms must still follow the laws of every place where they do business.
- The Code has 55 principles, organised around six leading principles:
- Leading principle - What is expected (in short)
- Ethics - Behave ethically and professionally to support a fair market

The exercise I'm working on:
Make a one-page "Code map": the six leading principles, one plain-English sentence each, and one example of good or bad behaviour you can imagine for each (made-up, no real firms).

I'm stuck. Please:
1. Explain the main idea in plain, simple words with one everyday example.
2. Walk me through the exercise one small step at a time. Ask me what I've done so far before giving the next step.
3. Don't just give me the final answer. Help me do it myself, and check my work when I share it.
4. This is for learning only. Remind me to check with a licensed professional before I make a real decision about my own money, health or legal situation.

I'm a parent helping my child (about 8 years old) with a lesson called "The professional standard: the FX Global Code" from the course "Professional Markets Study: risk, regulation and ethics".

Here's what the lesson says:
A football league has a rule book for the referee, but the clubs also sign a promise about fair play: no cheating, no secret deals, tell the truth. The FX Global Code is like that fair-play promise for the big currency market. It is not the law, but serious players sign up to it.

The activity:
Make a one-page "Code map": the six leading principles, one plain-English sentence each, and one example of good or bad behaviour you can imagine for each (made-up, no real firms).

Please explain this so an 8-year-old understands: short sentences, a fun everyday example, and no hard words.
Then give me 3 simple questions I can ask my child to check they understood, and a way to do the activity together, one tiny step at a time.
Keep it general and educational. This is not advice for a real situation.

Open Claude

Sources

GFXC, FX Global Code: www.globalfxc.org/fx-global-code/
GFXC, Establishment of the FX Global Code: www.globalfxc.org/fx-global-code/establishment-of-the-fx-global-code/
GFXC, Statement of Commitment: www.globalfxc.org/adopting-the-code/statement-of-commitment/
FX Global Code, December 2024 (PDF): www.globalfxc.org/uploads/fx_global.pdf

My notes

I learned this

02