Foreign Exchange Committee: 2005 Annual Report

摘要

In the past year, the Foreign Exchange Committee has successfully met its mandate of improving the integrity and functioning of the wholesale over-the-counter foreign exchange market by responding to a number of complex challenges. These challenges stemmed from marketplace changes that were first observed about five years ago and that have evolved into major forces reshaping the conduct of foreign exchange trading. These forces include the emergence of currency as a separate asset class and the associated arrival of new market participants, significant growth in foreign exchange trading volume and liquidity, the rapid increase of new electronic trading technologies and methods, and the heightened activity in exotic derivatives and newly tradable and non-deliverable currencies. Together, these forces have produced what is essentially a new foreign exchange market. Anticipating this transformation, the Foreign Exchange Committee has been working to apply long-standing principles to the formulation of best practice recommendations and communications regarding the new market. This market is characterized by more complex market instruments, changed counterparty roles, and new means of executing and settling trades. One key principle is that the best markets are those that are efficient, fair, and flexible, with participants who act with integrity. Markets that exhibit these characteristics not only serve their participants well, but also serve broader purposes within the global financial system and the economy. To promote and maintain an efficient and ethical market, the Committee has sought to offer guidance that balances the legitimate interests of all market participants without interfering with the markets natural evolution. The Foreign Exchange Committee completed three major projects related to the market forces noted above, continued work on two others, and initiated work on one more.