The Reserve Bank on Tuesday announced the establishment of the South African Foreign Exchange Committee (SAFXC) that seeks to guide and encourage market participants to adhere to the FX Global Code.
The SAFXC is a forum consisting of key professionals and associations in the domestic wholesale foreign exchange (FX) market, such as authorised dealers, the Association of Corporate Treasurers of South Africa (ACTSA), the FX interdealer broker community, and the Banking Association of South Africa (BASA), as well as a representative of the Financial Services Board, among others.
“The SAFXC seeks to guide and encourage market participants to adhere to the FX Global Code to promote a fair and more transparent FX market as well as adherence to international best practice. The Global Code sets out the principles of good practice for wholesale FX markets and provides a set of guidelines for promoting a fair and more transparent, liquid, open and robust market,” said the central bank.
It serves as a supplement to existing local laws, regulations and rules by identifying and promoting global best practice in the domestic FX market.
The processes to establish the SAFXC, which is chaired by Head of Market Intelligence and Operations at the central bank Zafar Parker, commenced after South Africa became a member of the Global Foreign Exchange Committee in May 2017 and endorsed the Global Code.
The SAFXC, as an independent local FX committee, replaces the Foreign Exchange Sub-committee of the Financial Markets Liaison Group.
“The decision to form the SAFXC reflects not only South Africa’s continuous efforts to enhance the effective and efficient functioning of the local FX market, but also the commitment to work towards the promotion of practices in the local FX market that are consistent with the principles outlined in the Global Code.”
The Reserve Bank said it has not only endorsed the Global Code but demonstrated its commitment by publishing a Statement of Commitment on its website on Tuesday, to coincide with the launch of the SAFXC.
The publishing of the statement which can be found on https://www.resbank.co.za/Lists/News%20and%20Publications/Attachments/8323/SARB%20FX%20Statement%20of%20Commitment.pdf is in line with other central banks such as the Bank of England, the European Central Bank, Bank of Canada and the Reserve Bank of Australia.
“The South African Reserve Bank expects its counterparties in the FX market to adhere to the Global Code and to demonstrate their commitment by publishing their own Statements of Commitment in support of the integrity, effectiveness and efficiency of the domestic FX market.”
In addition, with effect from 1 September 2018 the Reserve Bank will only conduct FX transactions with those market participants that have publicly endorsed the Global Code through their own Statement of Commitment.
“The Reserve Bank welcomes the launching of the SAFXC as an initiative that will contribute towards strengthening the integrity, effectiveness and efficiency of the domestic wholesale FX market.”