Minutes of the London FXJSC Main Committee Meeting - 13 March 2025

Minutes

Item 1 – Welcome and Apologies

Vicky Saporta (Chair, Bank of England) welcomed Oliver Brennan (BNP Paribas) as a guest presenter. Ms Saporta also welcomed Andrea Rosen (Bank of England), Scott Harman and Simon Jones (London Stock Exchange Group) as observers. Ms Saporta also announced the departure of Giles Page (Citigroup) and took the opportunity to thank him for his contributions to the FXJSC over the previous six years.

Item 2 – Minutes of the 27 November 2024 Meeting

The minutes of the 27 November 2024 meeting were approved.

Item 3 – Market update

Richard Purssell (Insight Investments) and Oliver Brennan (BNP Paribas) presented an update on recent market developments.

Mr Purssell outlined how G10 currencies had performed over the last three years and noted that G10 spot spreads had moved in tandem with recent market volatility. Mr Brennan discussed the economic and geopolitical factors impacting the US dollar and British pound and highlighted yield differentials and tariff risk as key drivers of FX movements.

The Committee discussed the increased volatility across currency pairs and how this had been interpreted by different market participants. There was a general consensus that although volatility had been elevated, FX liquidity and market functioning remained robust.

Item 4 – FXJSC Turnover Survey – October 2024 Results

Muna Lisimba (Bank of England) gave an overview of the October 2024 FXJSC Turnover Survey results. Mr Lisimba noted that average daily turnover for the 6 months to October was $3,217bn, representing a 5% decline from the preceding April 2024 survey. On a year- on-year basis, average daily turnover increased by 10% when compared to the October 2023 survey. FX swaps had remained the most traded instrument, at 44% of overall volume.

Item 5 – FX Settlement Risk Mitigation

Natalie Lovell (Bank of England) noted that the Bank of England would apply on behalf of the FXJSC to have the December 2024 version of the FX Global Code formally recognised by the FCA.

Ms Lovell provided a high-level overview of the October 2024 GFXC FX Settlement Risk Survey results. Ms Lovell added that the April 2025 GFXC FX Settlement Risk Survey would run alongside the BIS Triennial Survey, and both surveys would use consistent reporting methodology.

Ms Lovell explained that during 2025 the GFXC FX Settlement Risk Working Group would focus on analysing the results of the GFXC and BIS Triennial FX settlement risk surveys. The Working Group would also consider producing a discussion paper on the potential impact of the UK/EU move to T+1 securities settlement on the FX market.

Item 6 – The uses of the WM/R 4pm FX benchmark

Vicky Saporta (Chair, Bank of England) highlighted the Muhle-Karbe and Oomen paper which compared FX fixing methodologies. Ms Saporta also noted that effective 13 November 2024 the WM/R 4pm benchmark (the Fix) had been designated as critical under the Financial Conduct Authority’s (FCA) UK Benchmark Regulation.

Sarah Collins (UBS Asset Management) and Kate Hill (Aviva Investors) gave an overview of the Fix and how its use had evolved over time. It was noted that the Fix was used as a benchmark rate by a broad range of market participants. By trading close to, or at the Fix, participants could minimise tracking error1 and FX risk. The Fix could also be used to calculate global indices, value assets, and track performance.

There had been a notable increase in flow around the Fix, in particular at month/quarter-end. The Committee discussed the potential impacts of the Fix on market functioning and how those impacts could be exacerbated in a stress. There was a range of views on the benefits of the Fix to end users. Committee members also discussed the challenges of moving away from the Fix given that many client mandates dictate its use.

Item 7 – FXJSC Sub-Committee updates

Sharon Blackman (Chair of the Legal Sub-Committee) noted that the Legal Sub-Committee had met on 5 March. Agenda items had included: reflections on the regulatory framework impacting the FX market and a 2024 look back and 2025 look forward on the Legal Sub- Committee’s discussion topics.

James Kaye (Chair of the Operations Sub-Committee) noted that agenda items at the 26 February Operations Sub-Committee meeting had included: the FXJSC Turnover Survey results, the GFXC’s work on FX settlement risk mitigation, the use of Legal Entity Identifiers

1 A measure of how closely a portfolio follows the index to which it is benchmarked.

(LEIs) in ISO20022, and the Operations Sub-committee’s communication channels during resilience events.

Item 8 – Regular updates

Alan Barnes (Financial Conduct Authority (FCA)) provided an update on the UK move to T+1 securities settlement and the potential impact on FX markets.

James Kemp (Financial Markets Standards Board) summarised the key takeaways from the Global Financial Markets Association’s (GFMA) response to the International Organization of Securities Commission’s (IOSCO) consultation on pre-hedging practices.

Mr Kemp also noted that the GFMA’s Global Foreign Exchange Division (GFXD) had published its FX Trading Venues Questionnaire. The Questionnaire is available via the GFXD website and can be sent bilaterally from investment firms to Trading Venues to support the collection of standardised data from venues.

Mr Kemp also noted ongoing work by GFXD to further understand why certain FX trades are settled on a gross bilateral basis. This will feed into the GFXC work on this topic.

Attendees

Alan Barnes – Financial Conduct Authority
Galina Dimitrova – The Investment Association
Giles Page – Citigroup
James Kaye (Chair, FXJSC Operations Sub-committee) – HSBC
James Kemp – Financial Markets Standards Board
Jeremy Smart – XTX Markets Kate Hill – Aviva Investors
Mani Natarajan – Morgan Stanley
Marc Bayle de Jesse – CLS
Mimi Rushton – Barclays
Neehal Shah – BNP
Paribas Nina Moylett – M&G
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
Sophie Rutherford – State Street
Vicky Saporta (Chair) – Bank of England

FXJSC Secretariat

Muna Lisimba – Bank of England
Natalie Lovell – Bank of England
James Brennan (Legal Secretariat) – Bank of England
James O’Connor – Bank of England
Shiv Khetia – Bank of England

Guest attendees

Andrea Rosen – Bank of England
Oliver Brennan – BNP Paribas
Scott Harman – London Stock Exchange Group
Simon Jones – London Stock Exchange Group

Apologies

Kevin Kimmel – Citadel Securities
Lisa Dukes – Corporate Representative, Association of Corporate Treasurers
Simon Manwaring – NatWest Markets
Stephen Jefferies – JP Morgan