Minutes of the London FXJSC Main Committee Meeting – 27 November 2024

Minutes

Item 1 – Welcome

Vicky Saporta (Chair, Bank of England) welcomed Lionel Oster (UBS Asset Management), Murat Ulgen (HSBC), and Andrew Harvey (Global Foreign Exchange Division of the Global Financial Markets Association) as guest presenters.

Ms Saporta welcomed Alex Piddington (Financial Conduct Authority) as an observer.

Item 2 – September meeting minutes

The minutes of the 26 September 2024 meeting were approved.

Item 3 – Market update

Lionel Oster (UBS Asset Management) and Murat Ulgen (HSBC) presented an update on recent market developments. Mr Oster outlined the factors driving the potential path of the United States (US) dollar, including the timing and impact of increased tariffs on US trading partners. Mr Ulgen discussed the outlook for emerging markets and the potential that some currencies could continue to outperform provided certain conditions were met, such as central bank policy credibility, prudent fiscal policy, and a strong domestic economy.

The Committee discussed the impact a potential trade escalation between the US and countries affected by increased tariffs could have on FX prices and market volatility. Members also noted the implications of any divergence in growth and interest rate policy paths between the US and other countries.

Item 4 – Global Foreign Exchange Committee (GFXC) update Natalie Lovell (Bank of England) gave an update on the GFXC’s three-year review of the FX Global Code (the “Code”). Ms Lovell noted that the review had focused on further mitigating FX settlement risk and enhancing FX data transparency. A public consultation on the proposed changes to the Code had taken place in October 2024, and the updated Code was expected to be published following the GFXC meeting in December 2024. Ms Lovell thanked Committee members for their engagement and feedback throughout the Code review process. Ms Lovell also noted that Lisa Dukes would be nominated as co-Chair of the GFXC Motivation for Adherence Working Group.

Ms Lovell said that seven central banks had taken part in the October FX Settlement Risk Survey. It was also noted that the BIS Triennial survey would take place in April 2025 and include the updated approach for collecting FX settlement risk data.

Item 5 – FX settlement resilience

Marc Bayle de Jesse (CLS) updated the Committee on CLS’ establishment of an Alternative Processing Site (APS) to improve the resilience of CLSSettlement. The APS would deliver Payment-versus-Payment settlement in the extreme but plausible scenario that CLS’ business-as-usual processing sites were unavailable. Testing of the APS was underway with CLSSettlement member firms.

James Kaye (Chair of the FXJSC Operations Sub-Committee) provided an overview of the FX Settlement Crisis Management Playbook (the “Playbook”), which covered what firms should do in the event of an outage of a critical FX settlement system. Mr Kaye explained that the Playbook had been revised to be a 2-page principle-based guide.

Andrew Harvey (Global Foreign Exchange Division (GFXD)) outlined recent work by the GFXD to identify areas of risk across the end-to-end FX trade lifecycle. Initial detailed analysis was on a prolonged settlement service outage, identifying areas for both public and private sector consideration.

Members noted the importance of clear and timely communication during a major industry disruption. There was discussion on the existing industry communication channels and the importance of robust internal dissemination of information from those in contact with industry crisis groups.

Item 6 – 2024 review and 2025 forward look

Ms Saporta (Bank of England) reflected on 2024, highlighting the key topics the FXJSC had discussed during the year.

Looking toward 2025, members discussed the potential key themes for the FX market and which topics would be of most benefit for the Committee to explore. Members noted that the use of FX fixings, the growth of digital assets, and the impact of regulation could all be useful discussions. It was noted that the UK and European move to T+1 securities settlement and the BIS Triennial Survey results would also be discussed.

Item 7 – FXJSC Sub-Committee updates

Sharon Blackman (Chair of the Legal Sub-Committee) noted that the Legal Sub-Committee had met on 26 November. Agenda items had included: an overview of the Bank of England Innovation in Money and Payments discussion paper^{footnote [1]} and its intersection with the FX market; and an update on the FX Settlement Crisis Management Playbook from the FXJSC Operations Sub-Committee.

Mr Kaye (Chair of the Operations Sub-Committee) noted that agenda items at the 20 November Operations Sub-Committee meeting had included: presentations from the Bank of England on the introduction of longer operating hours for the Real Time Gross Settlement (RTGS) system, and Swift on its resilience capabilities.

Item 8 – Regular updates

Alan Barnes (Financial Conduct Authority (FCA)) noted that the FCA had recently designated the WMR fix as a critical benchmark^{footnote [2]}. The criteria to be designated as critical included the lack of availability of a substitute benchmark and significant and adverse impact on the UK market and real economy if the benchmark ceased.

The FCA had also recently published a policy statement on improving transparency for bond and derivatives markets^{footnote [3]}. Based on industry feedback, FX derivatives had been included in category two, which required the trading venue to provide adequate pre- and post-trade transparency in relation to all orders and transactions executed under their systems.

Mr Barnes also noted that the International Organization of Securities Commissions (IOSCO) had published a consultation paper on pre-hedging practices with a deadline for feedback of 21 February 2025^{footnote [4]}.

Attendees

Alan Barnes – Financial Conduct Authority

Giles Page – Citigroup

James Kaye (Chair, FXJSC Operations Sub-Committee) – HSBC

Jeremy Smart – XTX Markets

Kate Hill – Aviva Investors

Kevin Kimmel – Citadel Securities

Lisa Dukes – Corporate Representative - Association of Corporate Treasurers

Mani Natarajan – Morgan Stanley

Marc Bayle de Jesse – CLS

Mimi Rushton - Barclays

Neehal Shah – BNP Paribas

Paul Houston – CME Group

Philippe Lintern – Bank of England

Rajesh Venkataramani – Goldman Sachs

Richard Bibbey - HSBC

Richard Purssell – Insight Investment

Sally Francis-Cole – London Stock Exchange Group

Sarah Boyce – Association of Corporate Treasurers

Sarah Collins – UBS Asset Management

Sharon Blackman (Chair, FXJSC Legal Sub-committee) – Citigroup

Simon Manwaring – NatWest Markets

Stephen Jefferies – JP Morgan

Vicky Saporta (Chair) – Bank of England

FXJSC Secretariat

Laura Austin – Bank of England

Natalie Lovell – Bank of England

Sakshi Gupta (Legal Secretariat) – Bank of England

Shiv Khetia – Bank of England

Sita Mistry – Bank of England

Guest attendees

Alex Piddington – Financial Conduct Authority

Andrew Harvey – Global Foreign Exchange Division

Lionel Oster – UBS Asset Management

Murat Ulgen – HSBC

Apologies

Galina Dimitrova – The Investment Association

James Kemp – Financial Markets Standards Board

Nina Moylett – M&G

Sophie Rutherford – State Street