FX Global Code and Make whole clause: Difference between pages

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''Foreign exchange''
''Securities''.


The FX Global Code is a set of global principles of good practice for the wholesale foreign exchange markets developed by the Bank for International Settlements (BIS).
A strong form of protection for lenders/investors in securities, designed to mitigate the adverse effects of call risk for investors.


These aim to provide a common set of guidelines to promote the integrity and effective functioning of foreign exchange markets.
Under a make whole clause the borrower/issuer has to value the cash flows beyond the date of the early call/redemption at the government bond yield.




<span style="color:#4B0082">'''''Good practice as standard'''''</span>
This potentially makes it prohibitively expensive for the issuer to take an early redemption.


:"Both the FX Global and the UK Money Market Codes are voluntary, but drafted to encourage the broadest possible range of market participants to become involved by signing up to the statement of commitment.
The consequence of a make whole clause for the investor is that they can re-invest the redemption monies in government stock, thus preserving their originally expected cash inflows at lower risk.


:The overarching principle of both of these codes is that market participants should strive for the highest ethical standards."


:''The Treasurer magazine, November 2017, p27 - Sarah Boyce, associate policy and technical director at the Association of Corporate Treasurers.''
Make whole clauses are similar in their effect to Spens clauses.


Sometimes known as a make whole ''provision''.


The FX Global Code is also sometimes known as the Global Code, or the Global FX Code.


 
== See also ==
==See also==
* [[Call risk]]
* [[Bank for International Settlements]]
* [[Clause]]
* [[Compliance risk]]
* [[Security]]
* [[Foreign exchange]]
* [[Spens clause]]
* [[Foreign Exchange Committee]]
* [[FXWG]]
* [[Global Foreign Exchange Committee]]
* [[MPG]]
* [[Statement of commitment]]
* [[UK Money Markets Code]]
 
 
==Other links==
[https://www.treasurers.org/codes Association of Corporate Treasurers (ACT) FX Global Code resources]
 
[https://www.treasurers.org/node/334778 FX Global Code warmly welcomed by the ACT]
 
[http://www.globalfxc.org/fx_global_code.htm FX Global Code webpage]


[[Category:Accounting,_tax_and_regulation]]
[[Category:Accounting,_tax_and_regulation]]
[[Category:Corporate_financial_management]]

Latest revision as of 15:40, 10 December 2021

Securities.

A strong form of protection for lenders/investors in securities, designed to mitigate the adverse effects of call risk for investors.

Under a make whole clause the borrower/issuer has to value the cash flows beyond the date of the early call/redemption at the government bond yield.


This potentially makes it prohibitively expensive for the issuer to take an early redemption.

The consequence of a make whole clause for the investor is that they can re-invest the redemption monies in government stock, thus preserving their originally expected cash inflows at lower risk.


Make whole clauses are similar in their effect to Spens clauses.

Sometimes known as a make whole provision.


See also