Minutes of the London FXJSC Operations Sub-committee Meeting – 15 June 2023

Minutes

Minute 1 – Welcome and Apologies

Kerry Peacock (Chair, MUFG) welcomed guest presenters Christophe Coutte (RBC Capital Markets), Daniel Fajuke (Bank of England), Sharon Wallis (Bank of England), and observers Dean Chard (SWIFT), and Rita Davy Sen (HSBC). There were apologies from Boyd Winston (JP Morgan), Gavin Platman (Insight Investment), and John Hagon (CLS).

Minute 2 – Minutes of the March Meeting

The minutes of the 1 March 2023 meeting were agreed.

Minute 3 – Terms of Reference Update

The Chair outlined updates to the Operations Sub-Committee’s Terms of Reference. The changes related to the Committee’s participation in the Sector Response Framework (SRF), and its diversity and inclusion aim.

Minute 4 – Membership Update

The Chair provided an update on new members joining the Operations Sub-Committee from the next meeting onwards.

Minute 5 – Market Conditions

Christophe Coutte (RBC Capital Markets) presented an update on recent market developments. Analysts were forecasting an elevated risk of recession in early 2024 due to high core inflation. Mr Coutte noted that despite wider G10 policy rates since 2008, G10 FX volatility had fallen. Mr Coutte also noted that FX returns vary widely depending on whether the US enters recession alone, or whether the US and the rest of the world are in recession together.

Minute 6 – FXJSC Turnover Survey

Daniel Fajuke (Bank of England) presented proposed updates to the “Execution Method” categories in the FXJSC Turnover Survey. The updates would align the survey more closely to the BIS triennial survey. Members discussed the proposed updates including the challenges around obtaining data on transactions executed via prime brokerage. During the discussion Mr Fajuke noted that there was an aim to introduce the proposed updates in Q4 2023.

Mr Fajuke also shared a proposal to update the survey used to collect FX settlement data. Mathias Drehmann (Head of Secretariat, Markets Committee, BIS) and other BIS colleagues dialled into this section of the meeting. The updates were intended to strengthen FX settlement data integrity and improve the consistency of responses. Mr Fajuke outlined next steps which included the establishment of a small working group to refine the survey questions, which would be tested by some local FX committees through their semi-annual FX turnover surveys.

Minute 7 – SIMEX 22 and operational resilience

Sharon Wallis (Bank of England) presented an overview of SIMEX 22 – a two-day market-wide simulation exercise to test the UK financial sector’s resilience to a major operational disruption. The FXJSC participated in the exercise as an observer. Ms Wallis summarised collective lessons from SIMEX 22 including equipping the Cross Market Business Continuity Group (CMBCG) to better identify the most urgent issues driving effective decision making and to hand-off technical issues to specific operational level groups during incidents.

Ms Wallis also provided an update on the FXJSC’s progress in embedding the Sector Response Framework’s minimum operating principles, including highlighting the need for the FX Settlement Playbook to be updated. Members discussed the playbook update, with suggestions including broadening focus from FX scenarios to impacts and inclusion of coordination arrangements.

Minute 8 – FCA Regulatory Update

Oliver McCausland (FCA) updated the Committee on an upcoming FCA policy statement on the Trading Venue Perimeter with relevance for FX platforms. Mr McCausland also updated Members on the FCA’s work with the Accelerated Settlement Taskforce looking at the potential impact of the US moving to T+1 securities settlement.

Minute 9 – Education & Outreach

GFXD Update

Steve Forrest (UBS) updated Members on the GFXD’s most recent agenda items including Payment versus Payment (PvP) settlement and US T+1 securities settlement. The GFXD were preparing the 2024 agenda. Mr Forrest also noted the ECB’s paper on sound practices for managing FX settlement risk.

UK Finance Update

Andrew Rogan (UK Finance) updated the Committee on UK Finance’s ongoing work to implement the UK’s operational resilience framework, including work to reduce the divergence in taxonomies across firms. Mr Rogan also updated Members on UK Finance’s recent work on national power outages.

Minute 10 – Any Other Business

The Chair informed the Committee that Gavin Platman (Insight Investment) had stepped down as Deputy Chair and had been replaced by Gail Smith (RBC Capital Markets).

Attendees

Adam Jukes – Deutsche Bank

Andrew Grice – Bank of England

Andrew Rogan – UK Finance

Claire Forster-Lee – Morgan Stanley

Gail Smith (Deputy Chair) – RBC

James Kaye (Deputy Chair) – HSBC

Joe Halberstadt – SWIFT

Kerry Peacock (Chair) – MUFG

Oliver McCausland – FCA

Steve Forrest – UBS

FXJSC Secretariat

Enyi Chen – Bank of England

Joe Hearn – Bank of England

Mala Gopalakrishnan – Bank of England

Matthew Hartley (Legal representative) – Bank of England

Natalie Lovell – Bank of England

Zish Jooma – Bank of England

Guest attendees

Christophe Coutte – RBCCM (Presenter)

Daniel Fajuke – Bank of England (Presenter)

Dean Chard – SWIFT (Observer)

James Andrews – JP Morgan (Alternate)

Rita Davy Sen – HSBC (Observer)

Sharon Wallis – Bank of England (Presenter)

Apologies

Boyd Winston – JP Morgan

Gavin Platman – Insight Investment

John Hagon – CLS

Mike Irwin – XTX Markets

Terri van Praagh – Northern Trust