Transcript of Question & Answer Session Panel participation at the Redefining Conduct in FX markets event

We're going to move on to the panel session now. What we'd like to do is to make this as interactive as possible, so you people down there are at a little bit of a disadvantage. I can't see you that well, but if you put your hand up, there are people with microphones that can get to you. So if you've got a question, just put your hand up and get our attention and just join in the conversation please.

Very briefly on my immediate right is Jonathan Woodward, head of transaction sales at Refinitiv. Stuart Simmons is senior portfolio manager at QIC. Lee Merchant is head of global foreign exchange at Deutsche Bank in Sydney. And I think most of you know Guy Debelle, who's Deputy Governor of the RBA and chair of the Global Foreign Exchange Committee.

I thought we'd start off, I mean Cathie mentioned the three year review there, Guy. So as you look ahead to that three year review, what do you think are the key issues? Clearly ASIC's got an issue or two they want to make clear. How do you see it?

We've been getting a fair bit of advice, by a number of publications, including your own, over the last few weeks about what we should be considering, which is great because we are actually looking for input as to what people think we should be looking at in the three year review. We are at the moment going through the various foreign exchange committees, from now till the end of next month, we can get as much feedback from market participants as to what they think we should look at.

So we're actually really asking for people to come to us and tell us what we should be looking at across the various jurisdictions. And we will be talking to the various securities regulators around the world. We have already had conversations with them as to what they think we should be looking at too. So, and when you and I talked about this in the recent edition, that appeared in a recent edition of Profit and Loss, there are some of areas which we clearly are focusing on, and some of which are already out there.

So anonymous trading is one clear area of focus I think since, just coming up on three years since we launched the Code, but five years since we started the process. So over that five years, that's become a much larger part of the market. And so, Cathie mentioned about the Code being a living document and so it was always going to evolve as the market structure evolved. Well that's an area where the market structure has evolved and we need to address that. A few people are interested in last look, I believe …

I honestly thought, I honestly thought we'd done that one three years ago.

Yeah. So, but I think so as maybe most of you know, that was the first area we sort of went out and, I'm not allowed to use the word consulted, because my New York friends don't like using that word, but we asked people's opinion about last look. And we got plenty of feedback on that. But as it's gone on, I think that that's clearly an area where we need to revisit. I don't necessarily want to re-prosecute the same arguments that we prosecuted in great length a few years ago, but there are issues around I think things like hold times. Cathie mentioned trade rejection and that information and how people utilise that is something we will probably need to reconsider. The other area that Cathie mentioned is pre-hedging.

I've got a few dozen questions on that one.

Yeah. So I mean we spent a hell of a lot of time on pre-hedging and it's not easy to land, and I don't claim that we have. We have what we have here and is there scope to provide more context around what we've got? Yes. I think that's absolutely the case and so that is clearly something else that we'll be very much be in scope in the three-year review. So, at least in my view, anonymous trading is absolutely something we've already said we're going to do. But last look and pre-hedging, is something we're going to focus on. At the same time, I mean the balance, just to make it clear to people, I hope you've all signed up to the Code, but if in signing up for the Code, you can't have this thing changing every six months. Right? Otherwise you're not clear what the hell you signed up to.

And frankly it doesn't need change.

No, but, so there's, I mean I would say this having written a decent chunk of it, I actually think it's pretty good. But that aside, we arrived at this after a pretty extensive process over two years getting thousands of people's input on it and that, this is where we landed. So I think most of it is I think fit for purpose. And so I suppose what I'm trying to do is give people assurance that what we aren't about to do is rewrite the whole thing wholesale. Having done that once, I just don't think I can do that again in my life. But we aren't going to do that. What we are going to do is it is … But it is going to evolve, but in a way where in the areas where it needs to. And we're not revisiting, there is not the intent to revisit the thing sort of principle by principle, but just focus in on a few key areas where there are still clearly issues in the market and also areas where market practice has moved on.

Lee can I bring you in into something that Cathie brought up actually in her speech there that kind of bothered me? It was around pre-hedging so we might as well get straight to it. The kind of intent I got was, well you need a structure for pre-hedging. Markets change minute by minute. How easy or difficult is it to actually establish a pre-hedging firm structure, or does it have to be a broader policy within which you operate?

Well as Guy said when we were writing the Code it was a difficult thing to land. So when you have the principles set out as it is, then you have to look at the vast array of your business where a pre-hedging may be utilised to benefit the client outcome. One of those I think that Cathie specifically mentioned, was pre-hedging of stop loss orders. Now there's a number of ways that a bank may execute a stop loss order as in methods, electronically or voice, are predominantly the two most common. And so then you need to set out guidance for your staff. Because not only, I should mention, not only is it my responsibility, my bank's responsibility to its client base, it's also got a responsibility to its traders, to protect its traders in practices which are condoned and common in the marketplace.

So, if we go back to stop losses then you have to strip out the ways that stop losses can be executed. You have to set pretty clear guidance. At Deutsche Bank all the handling policies probably actually have more detailed guidance than the Code at this point in time. We have obviously a surveillance ring around that, that monitors the practice of actually when an order hits the trading book, i.e. when it's been executed, what trading activity has actually taken place around that same time to monitor the particular type of pre-hedging that we condone and the Code condones has taken place.

Is there also an education issue here with some clients where you've actually got to educate the clients about the benefits to them pre-hedging certain orders?

To be honest, no. Pre-hedging of a stop loss specifically is for the large majority of the client base, especially that Deutsche Bank trades with, a practice that was known, regarded and expected in some way. When you look at client demand around a stop loss, a client obviously is asking the bank to do two things. One, to basically minimise the chance that the client will unfortunately get stopped out in the market. Therefore applying protection for that and observing that the market is trading through the level in a fair and relative manner. And then also minimising the cost of that stop loss on top, as in the fill rate.

Which is really what it's about, isn't it? Yeah, because it's about the slippage after the order is why you're pre-hedging it. Stuart from your point of view actually as a buy side trader, I mean obviously you execute larger tickets over a period of time, which in some ways could assist in pre-hedging. What's your view in terms of the pre-hedging debate?

You know, you talk about education in pre-hedging and I think that where the buy side could be educated around pre-hedging is the type of orders that they give, because there might be some naivety about the scenarios where pre-hedging comes in, particularly around benchmarks. If you leave a very large order for a London 4:00 PM fix, by necessity it needs to get pre-hedged. You cannot execute at the fix.

I never could explain that to a New York jury.

Yep. How long we would take to get to that point.

Yeah. And so there needs to be a sense of education around those circumstances, and what the expectations can be around it.

But generally it's about the transparency of action isn't it? As long as the executing party is clear with you what they're doing then …

Yeah absolutely.

Generally speaking, it should be okay. Yeah. Anonymous trading. Jonathan.

Yes.

What stick would you like me to beat you with? With a mashing stick or an anonymous? What are all the challenges or for a platform operator? You know the disclosures piece that Guy's talking about around last look and around hold times, but just general behaviour in an anonymous environment? Because there are people out there that think platforms should do more. Do you think platforms could do more?

Well they're very complex environments aren't they? So we run a couple of platforms. One is completely firm, one is firm and has last look. So that adds complexities to it straight away. I think the key for the firm for the venue operator is really, really proactive monitoring systems that notice what's going on in the market a long, long time before they actually impact it. And that's what we try and do where we see some certain behaviours sort of picking up from certain clients. Certain participants in that market, we will have a conversation with them about that activity. We have a very big rule book that everybody has to comply with. So any breaches of that, there are alerts that come out sort of every few minutes if something is going on. And that enables us to go in and either turn off the access if it really is deemed as a …

So it's quite an automated process?

It is. It's an automated process from an alert perspective. We do like to have a human having a look at that because otherwise you end up with some very upset people. If there was a really good reason for it …

Algos never get it wrong!

No. So maybe AI will be the solution at the end of the day. There you go. I've got one in as a little buzz word. I'm not saying blockchain yet.

[unclear 12:03]

So we look at all the ratios. We have alerts, we have a review committee and we apply different rules to the different venues because they operate in different ways. And we also obviously have disclosed venues that are also under surveillance as well. But the anonymous one is interesting because you really need to have that integrity, and we work very closely with central banks and regulators to make sure that they are completely up to speed if there is anything that might be perceived as creating a disorderly market or market abuse. Because obviously we're all governed by the EU Market Abuse Regulation, but we'll talk central banks around the world and quite often we'll give them the information and it'll come back with a no investigation needed. But I think we're going to get better over time as our technology gets better and everything. I mean everything is getting faster isn't it? So there's more data and there's more volume. It's a big chunk.

One man's market abuse is another man's best execution.

Indeed.

So how do you sort of manage that aspect? I mean, do you need to really get into the details with the, with the executing party about how they're trading or do you leave that to the LPs?

Well, no, so I mean, so on matching where it's just market participants and firm, we'll look at all that behaviour and make sure that it actually is by our rule book, it is allowed and nobody's breaking any rules there. If we see things like we're looking at anticipative IOCs that are trying to come in in the middle of the stuff, we'll go and have a chat with that participant and go, "What's going on here?" Because if you're in the middle of the trades they actually need to get done and you're disappearing, we don't want that in the market because it's not good for anybody.

Because that's quite a change, because there was a paper out, I think it was last year or the year before that actually said 99% of orders submitted to one of the primary venues were cancelled before execution. That's quite a high number.

Yes.

Yeah. But this was actually observed data as a research paper. It's available somewhere. Alexis Stenfors I think is the author if you want to look at it.

Okay.

So Guy, one thing I wanted to raise with you, which comes back to one of your earlier points is around the disclosure thing. You and I did have a chat a few weeks ago and you made a point that one of the things you, the message you want to get out is around the appropriate nature of disclosures, and not giving everyone basically a free hit. And do you think that's a widespread problem or do you think it's just something that just needs everybody to be reminded of?

I mean, obviously there's been a bit of a look at disclosures by some market participants lately over the last couple of weeks and a bit of publicity around that. But I mean, I think it comes back to what are we, providing maybe a little more guidance about some of the things we would expect to see in disclosures. I mean, I suppose what I don't think quite cuts it and I'm not sure I can say about how widespread it is, but what I would describe, I think in the way that I portrayed when I was talking to you before, is the caveat emptor disclosure. So as long as I tell you that I'm going to be trading at the same time as you, then I can basically do whatever I want. That doesn't quite cut it to me as an appropriate disclosure. You disclosed something, but that's not helpful to me as a counterparty.

So I think one of the things we'll look at is maybe just … But I don't think there's any prospect of being prescriptive on disclosures and saying, "This is exactly what a disclosure should look like." Because that is very much going to vary depending on the counterpart.

And that's the problem with …

But I think at the same time, I think it'd be useful to have some minimum set of information which is contained in that disclosure, which is useful to any counterparty. And then, there is then somewhat of an obligation on the counterparty to, if they want to know more, to ask for more, which is relevant to whatever their nature of the engagement.

Because that is one of the problems, you look at the last look thing, and I honestly cannot believe we're talking about it again, but the fact is last look is different on different platforms at different times and different times of day.

I also think last look seems to mean different things to different people, as well.

Yes, and in different environments.

Yes.

Someone's last look in a central limit anonymous order book, someone's last look on an RFQ. So they're vastly different environments.

A last look on a very infrequently traded currency coming out of Africa is a week, and then elsewhere it's a few milliseconds.

Yes. How do you view last look, Stuart? I mean as a buy-side participant?

Yes. I'm not … I know some firms are completely against it. I can see some reasons why banks would want to have it there, credit checks, operational checks and things like that. I think there's a bit more controversy when you go into hold times and things obviously.

Yes.

But, from our firm's perspective, we find our reject rates are exceptionally low.

Yes.

We don't necessarily have a problem with it. I think if someone has reject rates which are higher, they should be asking questions. And we ask questions, we get a list of reject rates from our firms and it may be as low as 0.01%. It is tiny.

Yes, and I guess that's the thing Jonathan, with the benefit of data. They should actually go in and have actually the empirical conversation rather than just, "Oh you, you keep on rejecting me". "No, I don't. You keep on sniping me." You know, as it used to be.

Yes, so the data is key and we provide … The platform should provide that data on a regular basis to their customers. The stuff that's going over the single bank platforms obviously has to come from the bank and not just stuff around there and that enables customers to really have a good conversation with their liquidity providers. But I just wanted to make the point about the difference of environments, reject rates on an RFQ system. I'll go by the one we are generally roundabout a 2%. I mean it's very, very small, as the market moves.

But it also comes down to expectations. So we had a client that used our order book facility a lot. His expectation was that he would get 45% rejects because of the nature of the liquidity he was seeking in that environment and he felt that it was the best platform out there for what he wanted to do. You could go to another guy, get him plugged into that same environment, who gets 5% rejects, who goes up the wall because he thinks it's absolute rubbish. So it does come down to your expectations of what you're actually going to be doing in a particular platform.

Is it easy to manage in a single dealer environment that vast range of expectations of clients?

In a single database, in a way, yes. It all depends on how well that you've set up your system so that you can monitor, thousands of users to hundreds of clients and how well you can put into place your controls around that.

As Jonathan said, we have clients that their business model simply wouldn't exist if we couldn't employ last look.

Yes.

So as long as we're able to apply that last look, and when I say last look in that sense, I do mean a hold time. If we are able to apply that the hold time in conjunction with the expectation of the client, and we're able to enable their business to grow, then I don't see basically why something should get in the way of that business.

Yes, it's something that you have to, say … Your question was how difficult it is. From my point of view, it's not difficult because we've done the work to set up the system, I should say. But yes, you do have to do a lot of groundwork at the beginning to make sure that you set up your system in such a way that you can monitor …

Let alone issue, countless disclosures to countless clients.

That as well, yes.

Yes. Do you actually find the disclosures change across channels? You know, is a client dealing predominantly with you by voice or RFS different to an API?

Yes, it is. So at Deutsche Bank now we have, I'd put it into three different categories of disclosure. We have our general EF in terms and conditions, which covers the single dealer, and the broad set of terms and conditions that we would interact with a client with over electronic means.

More recently in the last 18 months we have released something which is specific to API trading. It goes into a lot more detail into things which are quite unique to APIs. Things like internet connection, who owns data, whether there's a third party involved, whose responsibility is that third party.

And actually, what we found is that they are actually quite difficult to get clients to adhere to in some respects, because like some parts of the market API and API trading has raced on. And it has become a lot easier for most people to actually just call up and find a plug and play and go. But the actual understanding of that within the firm who's using that third party, or using the API is maybe not as up to speed as where we're taking the conversation in terms of this API agreement. So yes, we're trying to lead the market in a way to think about these things, and finding sometimes it's more difficult than we would have assumed.

I look forward for three-year review discussing it, API disclosures.

Stuart, I want to get onto one of the, sort of … I guess it's kind of a stick the critics of the Code use to beat it with, and that is buy-side adoption. I think, generally speaking, it's agreed that the buy-side adoption has been a bit disappointing globally. Again, returning to our friends in America, I find it fascinating that there's members that are FXC, that are still not signed up to the Code and they sit on the committee in spite of comments a year ago. Why do you think buy-side adoption has been so slow?

Yes, it has been poor, locally and globally. I checked the local register today. There's one corporate and two asset managers and zero pension funds who've signed up. And there could be more leadership from some of the bigger firms involved, both globally and domestically there.

Why haven't they signed up? There's a number of reasons. One is about, firstly, awareness. I've done some outreach on it to speak to different firms and a number of them still weren't aware of the Code's existence, and these are market participants whose main business is not foreign exchange.

Yes.

They've got bigger things to focus on. The second is really establishing that business case for the Code. There's a sense that this is a sell-side thing.

Yes.

There's a perception it is for the sell-side around conduct. There's also the ‘what's in it for me’ type of argument. Operationally they feel that there's constraints around putting resources into getting adherence to the Code. And lastly, I guess there's the sense of facilitation. How do I get started on this? They're unsure on how to pursue that.

It's going to pick up. What Stuart's working on … is one of the major drivers of this for the GFXC, is trying to address this problem and we are looking to provide information. He's working on developing that so we can help answer some of those questions.

But the other thing we're doing, most of our membership is actually going out and talking to the buy-side, both on the asset management side and on the corporate side, and just trying to understand what some of those sticking points that Stuart just highlighted are, and working either to just explain why we don't think they necessarily are a problem, or if they are, then thinking about how we can best go about addressing it.

That is something in the counterparts around the world are looking at doing over the next 12 months, is actually going out and talking, particularly to some of the more high-profile ones, and just understanding what is the sticking point and then trying to address that or convince them otherwise, I suppose.

Yes, there is a buy-side outreach work group.

Yes.

Part of the GFXC and there's been a lot of development, as Guy mentioned, tools and information and helping to establish that business case for the Code. Half of that's now available on the GFXC website, including a bit of a roadmap to adherence, presentation on building that business case, the motivations around signing up for the buy-side.

There is a template for gap analysis. It really helps people, leads them through the adherence of each of those 55 principles. Firstly, determining which of those apply to that market participant, because not all of them do. And proportionality is a really key issue there.

Yes.

And then there's some more to come. So we're working on other things like pretty big questions and answers, more comprehensive than the one that's there at the moment. Case studies from varied market participants in different domiciles and we're going to be working a lot more in a decentralised way.

And as Guy mentioned, locally the RBA has been doing a lot of work reaching out to firms and market participants and we want to work with associations as well to get that message out there and help with that motivational message as well.

I think that's key. The associations part is quite key and if you work with ACT around the world and they come up with a smaller part of the Code, they acknowledge the whole Code, but they really focus on the bits that are important for the treasurers. And we're hearing the same thing when we talk to asset managers around the world. There's always another bit of legal or compliance thing that needs to get done before they spend some resources on that.

Yeah, I think Jonathan's point is quite, that's what they, it's often the feedback I have. It's like, yes, okay, we've got … Fine. It's not that we don't like it, but we've got this, this, this, this and this, which are more important for our business.

And you know, it's getting where it sits on that priority list. But part of the point we're trying to get across is the proportionality point. Stuart mentioned that there's probably only a reasonably small part which is directly applicable to you in a way where, all 55 principles are applicable to Lee, and trying to get there.

He looks delighted at that fact.

Well I think, I do think they probably recognise that. That's not news, but trying to get that across, just focus on the bits which are relevant to you.

I think the central banks, the regulators could stare at the banks and just eyeball them into signing this.

I was just staring at Lee, just that fraction …

When you think about when you want to get the buy-side on board, the investment managers, the people that need to stare at them are going to be the asset owners who have given them the money to say, are you compliant? And that's where the power of influence lies.

I listened to your podcast on this the other day. You at least have one listener.

I think it's an interesting question, you're having with Galen. Is that, so what is … Is it about success or failure? And I think one of the things you've got to look at, I think, is where we are compared to where we were.

Yes.

And I think if I look at it, across the coverage across the industry, so on the sell-side it's large.

Yes.

On the non-bank liquidity providers, it's pretty high. On the platforms it's high, and then, yes, it steps down on the buy-side and then a leg lower again on the corporate side. But when you think what you've actually got by the time you've covered the first chunk of what I said, that's a pretty decent chunk of the market. That doesn't mean that we just sit and say that's great, job done by any means. We are having this focus on the buy-side and to some extent it's sort of starting at the top and working our way down. It's not after getting every single participant in the market signed up. It's getting the appropriate … There's a bit of proportionality on that as well.

Yes, yes. Lee, is your sense at the execution desks that the client firms understand the value the Code can bring, but it's above that, that the problem comes? Do you have many conversations with clients around the Code? Yes. I'm trying to blame you for not getting it out there.

Let me start by saying, look, I do have sympathy for parts of the buy-side community in terms of how they look at the Code. They have certain legal obligations already on their books that they're applying to their business and being comfortable that they can adhere to it in the way that maybe they would like to, is something that needs to be prioritised.

For example, at Deutsche Bank we employed one of the big four auditors to look at our business up and down. But then, as Guy did say, every 55 of the principles apply to me. But are there parts of the foreign exchange community where I hear the excuse, it shouldn't apply to us or it doesn't apply to us because of this and that. I don't have a lot of sympathy for that.

No, no.

I think, if you are trading actively in the foreign exchange market on a daily, weekly basis, then you are part of the market and, upon the conduct of us all rests our fate. So I think those people should feel they have an obligation to join and, if there are parts of the Code that are not to their liking, they feel can be improved or whatever, fine, but get in the tent, i.e. sign up and have that conversation within rather than throw stones from without.

I think something that struck me, does the message needs to get a little bit more, I hesitate to use the word aggressive, but more positive should we say, when we're reaching out to the buy-side, because I have spoken to some firms, particularly in Europe, where they would say, "Well no, we're actually actively going out to asset owners and investors and saying, we've signed up to The Global Code." How's the other firm that's looking to do that? That shows that we conduct best practise. Should our message be more about that, Stuart, in terms of saying, "You know what? We're better than these guys."

I think in terms of that message, a lot of the narrative that's going on with the Code are things around last look. You hear it now in cover and deal and anonymous trading, and for a lot of the buy-side, that doesn't really apply to them.

They have disclosed relationships, bilateral relationships. They're not really getting hit by Last Look that much. So sometimes we just need to simplify that message and really articulate the benefits of the Code.

And you know, Cathie mentioned some things earlier around order handling, mark-up, pre-hedging and the Code really helps to demystify that in that bilateral relationship. You can ask the right questions if you're aware of the Code and aware of the obligations from the counterparty.

Should we be talking to the compliance teams at these organisations as well? The banks, I'm sure, are fully on board, but is it actually maybe you reach in from behind by getting the compliance team say, "Excuse me, what about this Global Code? What do we do in there?"

I think our approach is actually to go to the top.

Yeah.

And say, "You, CEO", literally, "You, CEO, you're aware of this?" This is something to get because I'm not sure going to the compliance areas is always going to help because I think they'd look at it. Then, I think that's where some of these concerns arise. They say, "Oh." Trying to get across to them the sense of proportionality is I think possibly more challenging.

Because I guess, to a point, they deal with regulation mostly.

Yeah, that's right. And so they're going to, yeah, and also trying to get across that this is a Code of good practice rather than black letter regulation is, maybe, I'm trying not to be too stereotyping compliance areas here, but I think that's something which is hard to, given the current environment, to get across. Our approach has been more to go right to the top.

I think a knock on the door from compliance is about as welcome as a knock on the door from ASIC, I think, most of the time. One thing I did want to just briefly cover actually because recently the FCA in London, in the UK, sorry, turned around and actually recognised the Code.

ASIC recognises the Code. Is this a good stepping stone to actually getting more buy-side adoption on the basis that these are your regulators as well as the sell-side and actually if they're going to come and investigate your business, they are going to be using this as a benchmark. Is there an opportunity for hopefully more regulators around the world to take that approach and do you think it will help us build that buy-side adoption?

Yes. But actually it's already, outside of the US, it's reasonably there already too.

So it's just a question of going through the process.

Yeah, it's great that the FCA has done that and I think that that will help in exactly the way you just said, and the same with ASIC here. I think that's been great in helping that, but it is just getting there. But the message, I think by and large, it's still being seen primarily through the lens of the sell-side.

Yeah.

But I'm really coming back to what Lee said earlier, if you're an active participant in the market, you are an active participant in the market, regardless of which segment of the market you're looking at. And the sort of turnover you're generating as a large active buy-side participant is on a par with a bunch of those other market participants and so it is actually just as relevant to you as a market participant as it is to …

And I think it's fair to say that a lot of the conduct, not defending the conduct issues that we had in any way whatsoever, but a lot of them did sort of grow out of the banks' over-eagerness to please certain clients that were actually pushing them into a corner and maybe the Code gives us that sort of responsibility.

Does anyone actually have a question for the panel? We're going to close out in just a second. No. We've told you all you need to know. Love it. So let's sort of close out then by asking each of you how you would grade the Code's first couple of years as a full document.

We're just going back to school. Generally speaking, from your perspective, Jonathan, how have you seen the Code has impacted on the market?

What, I say, it's actually just the conversation that it's generated has been really healthy for the whole industry because the education of the buy-side has been key. I think most of the banks knew about it. Obviously, I live in Singapore and deal with the rest of Asia. I don't think that it's had a vast impact across all those banks there and a lot of the buy-side don't know what's going on.

So I think it's been really effective from starting those conversations. I found it a little bit tough with some of the other countries that have adopted the Code and then altered it and added to it and you just want to go, a lot of intelligent people around the world put a lot of time into this. Why have you added five sections?

You didn't take anything out, but you added five other things. You've attached financial penalties for noncompliance in certain areas and that will stop adoption of it in various places, but I think it's a really great starting point. I think the three-year review will help and we need to find ways of putting pressure on the people who can then put pressure on the people a bit further down that chain that need to adopt it.

Are you happy with how the Code's gone, Stuart? Your business?

I guess in terms of grading, I put an A plus in terms of effort for the people who are really intimately involved in the Code, people like Guy who were there from the very beginning. B in terms of its impact on the market and probably an F for the buy side.

Lee, from your perspective, how has it impacted how you do your business and your relationship with clients? Has it made it better or …

I actually was going to answer this in a slightly different way actually. I was going to answer from the point of view as a manager and leader of people that are trading in foreign exchange and have been trading in foreign exchange and the majority of them for a number of years. What the Code has enabled me to do as a manager and has enabled them to see, is there is something they can refer to now.

There is something that they can talk to about their clients, how we go about it, a universally, at this point, accepted compass or moral compass of directions as well. I think that has done the world of good for the banking side, especially the traders involved within the marketplace.

And I didn't know is no longer an excuse, is it? It's one of the big things.

Exactly.

I guess it's like, yeah …

What did Jefferson say? Everybody's born ignorant, but you have to work really hard to be stupid. And, words I live by. Yeah. Code gives us that.

So, Guy, from your perspective, I mean obviously you've come back to this after a two-year hiatus to a degree. You were still fully involved.

Yeah, I mean I think there's a couple of things to remember. One was where we were starting from. So, which I think sometimes gets a bit lost. Secondly, what the alternative was.

Yeah.

Which I think a lot of people forget. The alternative was a hell of a lot worse. And it was a real prospect of that. And thirdly, another lens to assess it by, I think what Lee said is actually a very important lens to think about it from. But another one is actually the impact on market functioning, which is partly a question of where we were starting from. So when we were starting, no one was willing to talk to anyone in the market and share any information whatsoever. Information flow had pretty much come to a complete halt and that didn't facilitate effective market functioning. So it was an overshoot to basically to the billion dollar fines.

And so part of our interest and the central banking side, at least, in developing with the Code was to help move the market back to a more effectively functioning market. And on that, I think we can claim some success but it's, and I'm trying to think, what had been my expectation four or five years ago whenever we started this and I don't think it's miles away from where we are today.

Again, if I go through that sort of adherence across those different parts of the industry, that's probably about what my prize would've been. That doesn't mean that we say, job done, that there is still further work to do there.

And I suppose the other thing which I've said a few times in the past, is one thing we try to get across is there's a bunch of stuff which is sort of black and there's a bunch of stuff which is white. There's a hell of a lot of grey in the middle and one thing we've tried, and it's always going to be thus, which is why black letter regulation would have been an absolute disaster for the market, which was a real alternative at one point. And what we're trying to do coming back to what Lee just said, is provide that guidance as to what good practise might look like for that grey.

There isn't a right or a wrong answer in some of those cases, but this provides you with a framework to try and think about what that answer is. And then, having made that decision, being able to say, when your ASICs of the world come knocking on the door and say, "Well, this is why we did what we did and here's our motivation for it." And it's like yeah, okay fine.

Which actually kind of helps the regulator as well in terms of the fact that that quick answer actually allows him to spend less time.

Yeah.

In someone's office they don't want to be in.

Yeah.

Yeah. One last chance for any question. No, we're good. Okay. Well, I'd like to thank Invast Global and Refinitiv for sponsoring this evening. We hope you enjoyed it. Thanks to our speakers.

Before we go though, feedback on the three-year review, please. You can get in touch with me. Get in touch with Matt Boge, who most of you know, or Jason Griffin. So Matt's, effectively the secretary of the GFXC these days, and Jason's the secretary of the AFXC. So any of the three of us, very happy to receive feedback by …

And details at globalfxc.org.

Well, I think you know where we live, but what we would ask though is if people could provide that basically over the next six, eight weeks or so, that would be great. We're certainly talking about it at the next AFXC meeting, but people in this room aren't necessarily members of the AFXC.

Please, very happy to hear the feedback from anyone across the industry.

No, that's us. Thank you very much again to our sponsors. Hope you enjoyed our evening. Refreshments are available, I believe, where they were to start with. Thanks to our panellists.