The Model Code is now endorsed by the CFEC, CCFP, and FMAC as the guide for best market practices for the Canadian foreign exchange market. You can view the full press release on the FMAC Web site at www.fmac.ca.
What exactly does this mean? Here are some answers to some commonly asked questions.

What is The Model Code?

• The Model Code is a comprehensive guide that outlines market principles, market conventions, dealing standards, and personal conduct for the wholesale financial markets in general. It is produced by ACI-The Financial Markets Association in consultation with regulatory bodies and market committees around the world. It covers the global market place and is not specific to any one country.

Where can I get a copy?

• The Model Code is available in hard copy from the FMAC office or you can retrieve a copy off of the ACI Web site at www.aciforex.com (you can link in through FMAC’s Web site if you like at www.fmac.ca)

Are Canada’s interests represented in The Model Code and will they be going forward?

• The Model Code is produced by the ACI-FMA Committee for Professionalism. It was recently revised in 2000 with Canada represented on this committee by Ian MacKay from Royal Bank of Canada. Karl Berger from CIBC World Markets is currently on this committee, so the answer is YES, Canada’s interests are represented.

My bank has it’s own “Code of Conduct”, so why is The Model Code necessary?

• While most institutions have internal guidelines, The Model Code is a standard that can be used between institutions for dispute resolution. This is particularly useful when disputes arise between counterparties in different countries. In addition, since it is the code governing the markets, all participants should be familiar with the market conventions and standards which apply to all market dealings.

Can the Model Code be used to resolve disputes?

• The Model Code is not legally binding, as the foreign exchange and money markets are currently self-regulated. However, The Model Code has been used in the past to resolve disputes when the parties agreed to adhere to its direction. In Canada, we also have the Canadian Committee for Professionalism to assist in dispute resolution. The CCFP is currently chaired by Karl Berger at CIBC World Markets.

Who should be familiar with The Model Code?

• While many of the standards in The Model Code are well known by veterans to the market, they should none the less be reviewed on a regular basis to ensure best practices are fresh in all dealers’ minds. In particular, new dealers and sales personnel should read through and understand the Code. A lot of times people feel that a code of conduct is intuitive. The Model Code goes beyond stating simple rights and wrongs. It describes market practices and dealing specifics, such as when is a price valid, when is a trade consummated, trading hours and more. All market participants will benefit from this, but particular attention should be given to informing new market entrants, whether they be from trading, sales or support staff.