THE Bank of Jamaica (BOJ) will make its next move towards reforming and modernising the local foreign exchange market this morning with the signing of the Bank of International Settlements (BIS) FX Global Code at its headquarters in downtown Kingston.

The respective heads of the Jamaica Bankers Association and the Cambio Association of Jamaica are expected to take part in today’s ceremony, which should symbolise and confirm that each member of their associations – which means every authorised foreign exchange (FX) trading entity in Jamaica – has signed onto the BIS code.

The BOJ is currently implementing the Foreign Exchange (FX) Code of Conduct to introduce standards to the market on fairness and transparency, driving industry consultations on forward market contracts.

The central bank plans to introduce an FX trading platform in the second half of 2020, which the bank will own and operate, and will manage the enrolment of (a) all authorised dealers and large cambios that will trade on this platform, and (b) large value non-financial ‘suppliers’ and ‘users’ (corporates) of foreign exchange that will view quotes and be able to conduct trades via their banks/cambios.

The bank says the code represents awareness and adherence to a set of 55 global best practice principles in FX markets, and encourages integrity, transparency, and ethical behaviour.

“This development has been in the making since the introduction of Bank of Jamaica’s Foreign Exchange Intervention and Trading Tool (B-FXITT) in 2017, and marks the latest step of the BOJ’s continued comprehensive collaboration with the industry to reform and modernise the local FX market,” the BOJ said yesterday in a release.

It further noted that the BOJ initiated and chairs the FX Market Development Committee, as well as the smaller FX working committee, which both have representation from the financial industry and the broader private sector.

Internally, deputy governors Wayne Robinson and Natalie Haynes, and their respective teams from the bank’s research and market operations, have spearheaded the technical work behind the reform process, in conjunction with outgoing Governor Brian Wynter, and Senior Deputy Governor John Robinson.

The bank said that this latest initiative follows closely on the heels of a partnership with Jamaica Institute of Financial Services and the Association Cambiste Internationale Financial Markets Association to develop an FX Global Code certification programme for local FX traders.

One cohort of traders has already been trained and training of a second group is expected to commence soon.

Widespread adoption of the FX Global Code across the diverse and broad spectrum of market participants is said to be vital to the integrity and effective functioning of the foreign exchange market. Given the global code’s voluntary nature, it will only be effective in strengthening conduct standards if market participants embrace, adopt and adhere to it.

International Monetary Fund resident representative Constant Lonkeng Ngouana says that the fact that Jamaica is having this conversation now indicates progress towards a more modern central bank.

Jamaica Bankers Association is a non-profit organisation that represents commercial and merchant banks in Jamaica. The Cambio Association of Jamaica, meanwhile, was formed to help regulate the currency flow and to contribute to stabilising operations of the foreign exchange market in Jamaica after the Government and the BOJ liberalised the market in 1993 and created licensed cambios.

The BIS is an international financial institution owned by central banks, which “fosters international monetary and financial cooperation and serves as a bank for central banks”.

The BIS carries out its work through meetings, programmes and through the Basel Process – hosting international groups pursuing global financial stability and facilitating their interaction. It also provides banking services, but only to central banks and other international organisations. It is based in Basel, Switzerland, with representative offices in Hong Kong and Mexico City.