Minutes of the London FXJSC Legal Sub-Committee Meeting - 6 September 2022

Minutes

Minute 1 – Introduction and Minutes

The minutes of the meeting of 8 June 2022 were approved.

Minute 2 – Discussion on the Financial Services and Markets Bill

James Webbe and Giuseppe Ciallella from the Bank of England gave the committee an overview of the Future Regulatory Framework (FRF) measures set out in the Financial Services and Markets Bill (the ‘Bill’) and its implication for financial services. James and Giuseppe explained that the Bill deletes the vast majority of Retained EU law relating to financial services. The Bill gives HMT a number of powers to HMT to modify, restate and amend or replace retained EU law relating to financial services.

The Bill gives the PRA and FCA a secondary objective to facilitate long-term growth and international competitiveness, in alignment with relevant international standards. The Bank, as regulator of financial market infrastructure (FMIs) will have a new secondary objective to facilitate innovation in the services provided by the CCPs and CSDs it regulates.

James and Giuseppe also explained that as a result of the Bill, regulators will need to publish and maintain a framework for reviewing rules.

Minute 3 – Discussion of the impact of Russia’s invasion of Ukraine

The Committee members discussed their observations on the legal issues arising from the developments relating to the Russian invasion of Ukraine. The Committee noted a number of developments in the market, including the issue of conceptualising a currency disruption event and who should determine this and the continued work surrounding the GFXD multi-lateral close out agreement.

Minute 4 – FXJSC Committee update

Sharon Blackman and George Johnston gave the members a read-out of the June FXJSC main committee meeting, which included a discussion of the GFXC’s priorities over the next two years and their focus on the effectiveness of the FX Global Code, continued work to understand the developments in settlement risk and potential mitigation mechanisms and the merits of improving data availability. Sharon and George also outlined the discussion on updates in market conditions, transparency and data availability in FX forwards and the discussion on multilateral close out methodology for Russian Ruble contracts.

Minute 5 – Discussion on potential changes to the Committee’s Terms of Reference

Sharon Blackman outlined changes to the Committee’s Terms of Reference (the ‘ToR’) so that they more closely align with both the FXJSC Main Committee and Operations Committee Terms of Reference. The changes proposed to the ToR will also include considerations for the diversity of membership of the Committee. The Committee members were supportive of the changes.

Minute 6 – Any other business

The Committee members discussed a number of topics which they would like to discuss in upcoming committee meetings, including an overview of benchmarking regulation in the context of foreign exchange.

Attendees

Sharon Blackman (Chair) – Citigroup
George Johnston (Secretary) - Bank of England
David Harris - Financial Conduct Authority (FCA)
Baljit Saini - NatWest
Simon Goldsworthy - Deutsche Bank
Rakesh Shah - Standard Chartered
Harkamal Atwal – HSBC
Nimisha Kanabar - Morgan Stanley

FXJSC Legal Sub-Committee Secretariat

Zara Coe – Bank of England
Matthew Hartley – Bank of England
Jutta Huesmann – Bank of England
Ayodele Cameron – Bank of England

Guest attendees

James Webbe – Bank of England
Giuseppe Ciallella – Bank of England

Apologies

Richard Lamb – UBS
Nasia Pachiti Pallikaropoulou – Barclays
Diane Bouwmeester – London Stock Exchange Group
Tamsin Rolls - JP Morgan
Sunil Samani - XTX Markets
Simon Helm - TP ICAP
Gaynor Wood – CLS
Jateen Shah - Bank of America
Dan Parker - Goldman Sachs