Date of meeting: 17 September 2024
Time: 3pm – 4.30pm | Location: Bank of England, Threadneedle St, London, EC2R 8AH
Minutes
Minute 1: Introduction
The Chair (Sharon Blackman) opened the meeting. The Chair noted the apologies and the attendees.
Minute 2: Minutes
The minutes of the meeting of 18 June 2024 were approved.
Minute 3: Global FX Committee (GFXC) Update (Natalie Lovell and Matthew Conway, Bank of England)
The speakers gave a brief update on two of the Global FX Committee’s key priorities.
1. The 3-year review of the Global FX Code:
The 3-year review of the FX Global Code is currently underway. To consider possible changes to the Code the GFXC established two working groups. One to consider FX Settlement and the other to consider FX Data.
FX Settlement Risk Working Group update
There are three areas of focus.
- The first is to strengthen Principle 35: Settlement Risk which includes the addition of a risk waterfall approach for managing FX Settlement Risk.
- Secondly, updates have been made to Principle 50: Measuring, Monitoring, and Controlling Settlement Risk to make it clearer how Market Participants should measure, monitor and control FX Settlement Risk.
- Lastly, there are proposed changes to Principle 51: Standard Settlement Instructions (SSIs). These proposed changes aim to discourage the use of multiple settlement instructions for the same counterparty, and for completeness the Working Group has proposed that a definition of SSI be added to the Code Glossary.
FX Data Working Group update
The changes proposed are to:
- enhance transparency around user-generated trade data on electronic trading venues.
- provide more transparency on FX data/transactions under certain types of “delegated execution”.
The working group has proposed amendments to Principle 9 and 10: Execution and the Disclosure Cover Sheets.
FX Global Code next steps: the updated version of the Code is due to be published by the end of the year.
2. The semi-annual FX Settlement Survey:
Matthew Conway gave an overview of the new global approach for collecting FX settlement data. It was noted that the October 2024 FX Settlement Survey round had been launched. A total of seven central banks had adopted the new approach for collecting FX Settlement data for the October round, ahead of the 2025 BIS Triennial Survey which would use the same Survey Template and Reporting Guidelines
Minute 4: ISDA update (Rick Sandilands and Jonathan Martin (International Swaps and Derivatives Association (ISDA))
FX Definitions
The speakers briefly explained the history of the FX and Currency Option Definitions (FX Definitions). These FX Definitions are jointly published with ISDA and EMTA and were published 1998, so are due to be reviewed and updated.
ISDA developed a plan for updating the FX Definitions, based on responses to an ISDA survey in 2023 of over 50 market participants, to understand how the current definitions can be improved, taking into account recent events and the evolution of FX markets since 1998.
Drafting of the updated FX Definitions will take place throughout 2024 and 2025, with publication expected end of November 2025. Market implementation of the updated FX Definitions will be in November 2027. This gives market participants and infrastructure providers 2 years to incorporate the changes into their systems and processes and aligns with Swift’s release schedule.
The drafting workstreams are focussed on:
- Disruption Events/Fallbacks overhaul
- Adjustment for unexpected holidays
- Digitisation/modernisation of the FX Definitions structure
- FX Novation mechanics
- EMTA and EMTA/SFEMC Template
An Implementation steering committee has been set up to keep an eye on the drafting to make sure nothing is being proposed that could cause operational problems.
Notices Hub
The ISDA speakers then gave a Presentation on the proposed Notices Hub. The proposed ISDA Notices Hub is intended to be a robust, secure online platform to provide market participants with a faster, safer and more efficient method for delivering and receiving time-critical notices under ISDA and other Master Agreements. Market participants would be able to maintain control of their contractual position even when more traditional means of delivery prove difficult or impossible. The Notices Hub would include functionality to allow physical address details to be updated in all ISDAs with matched counterparties by single entry, plus periodic verification to reduce incidence of stale address details.
The Indicative timeline:
- Completed: High-level Legal Survey: surveyed 71 jurisdictions with 59 responses to date. They ran a commitment process where the respondents were asked for principles of support on a non-reliance basis, subject to protocol drafting and what the platform looks like.
- Q3 & Q4 2024: Commence build and draft protocol and bilateral documents.
- Q1 & Q2 2025: Complete build, finalise documents and finalise opinions.
- Q2 2025: Launch Protocol pre-adherence period
- Q3 2025: Notices Hub go-live/Protocol launch.
Minute 5: Any other business
The timings and days of future meetings were discussed.
Attendees
Sharon Blackman (Chair) – Citigroup
Baljit Saini – NatWest (virtual)
David Harris – Financial Conduct Authority (virtual)
Joanne Napleton - London Stock Exchange Group
Krisha Somaiya – UBS (virtual)
Rowland Stacey – Goldman Sachs (Virtual)
Simon Goldsworthy – Deutsche Bank (virtual)
FXJSC Legal Sub-Committee Secretariat
Sakshi Gupta – Bank of England
Matthew Hartley – Bank of England
Carly Jones – Bank of England
Guest attendees
Matthew Conway – Bank of England
Natalie Lovell – Bank of England
Jonathan Martin - International Swaps and Derivatives Association (ISDA)
Rick Sandilands - International Swaps and Derivatives Association (ISDA)
Apologies
Gaynor Wood – CLS
Harkamal Singh Atwal – HSBC
Mayank Patel – Bank of America
Nimisha Kanabar - Morgan Stanley
Rakesh Shah – Standard Chartered
Sunil Samani - XTX Markets
Tamsin Rolls – JP Morgan Chase