Minutes of the London FXJSC Operations Sub-Committee Meeting – 9 June 2021


Date of meeting: 9 June 2021 | Location: Teleconference

Item 1 – Welcome and Apologies

John Blythe (Chair, Goldman Sachs) welcomed members to the FXJSC Operations Sub-committee meeting held via conference call. Mr Blythe welcomed new member Juna Nashi (Citadel), and guest presenters Alieda Moore (Bank of England), Arif Merali (Bank of England), Jonathan Sepanski (Bank of England), Orlando Fernandez Ruiz (Bank of England) and Neil Buchan (SWIFT).

Mr Blythe announced Jon Goddard (BNY Mellon) had left the Committee, and this would be Dan Horgan’s (Citi) last meeting.

Item 2 – Minutes of the 3 March meeting

The minutes of the 3 March 2021 meeting were agreed. There were no matters arising.

Item 3 – GFXC Update

Grigoria Christodoulou (FXJSC Secretariat, Bank of England) updated members on discussions at the March 2021 Global Foreign Exchange Committee (GFXC) meeting and the progress of the three-year review of the FX Global Code. It was noted that the GFXC considered the likely period of time market participants would need to review their practices in light of the Code changes. The Committee estimated that a timeframe of 6 to 12 months would be a reasonable benchmark.

The FXJSC Secretariat also provided an overview on the upcoming GFXC meeting on 28 June, with the main focus expected to be on any ‘fatal flaw’ comments on the three-year review proposals related to algorithmic trading & transaction cost analysis (TCA), anonymous trading, disclosures and FX settlement risk. The two guidance papers on pre-hedging and last look would also be reviewed for publication.

Members were invited to provide ‘fatal flaw’ comments and an aggregated summary on behalf of the FXJSC would be provided to the GFXC Secretariat ahead of the 28 June meeting. Following the GFXC meeting and Code proposals being approved, the updated Code text was expected to be published on the GFXC website in mid-July, and Code translations would be updated in due course.

Item 4 – Operational Resilience, Outsourcing and Third Party Risk Regulatory Update

Jonathan Sepanski (Bank of England) provided an update on the recent Operational Resilience policy statementfootnote [1] published at the end of March 2021. Mr Sepanski noted that regulatory authorities see operational resilience as a strategic priority, and following feedback on the consultation paper the core premise of the policy remains the same. While regulatory authorities may use different language in their versions of the documentation, the core policy and its objectives are the same and both PRA and FCA intend to supervise in the same manor, communicating throughout supervision. This is intended to be helpful for dual-regulated firms in particular.

Mr Sepanski highlighted that there is an initial one-year implementation period where firms are expected to have carried out the majority of the core proposals to a reasonable rather than sophisticated level. This will be followed by a three-year period where firms can continue to develop their implementation to a sophisticated level. The policy does not aim to replace any existing policies related to business continuity or operational risk, but rather to compliment them and provide a strategic framework to build resilience. Firms will not be expected to duplicate any work carried out in relation to other policies. It was highlighted that, from an international perspective, this policy does not aim to diverge from Basel operational resilience principles2supervisory expectations for firms’ transition from LIBOR to risk free rates. Looking ahead, focus in sterling markets was turning toward end-Q3 milestones aimed at moving away from new use of GBP LIBOR in cross-currency swaps and completing active conversion of legacy LIBOR contracts where viablefootnote [2].

Orlando Fernandez Ruiz (Bank of England) explained that the Outsourcing and Third Party Risk Management policyfootnote [3] was developed to compliment the operational resilience policy and that feedback received from the consultation had not lead to any dramatic changes. The policy takes an ‘outcomes focused’ approach which requires firms to take steps to manage their third party dependencies, even if they do not fall under traditional policy from an outsourcing perspective. The policy aims to remove the ability for firms to use definitions to create gaps in third party dependency risk management which may lead to areas of importance not being adequately covered.

Mr Fernandez Ruiz noted that work is being carried out to look at potential regulatory technology solutions which can be used to collect and map key, systemic suppliers within the financial systems.

Item 5 – Hybrid Working Environment

James Kaye (HSBC) presented to members on the topic of the Hybrid Working Environment. Since the Covid-19 pandemic, firms have started to rethink their working arrangements, specifically in relation to working from home. Mr Kaye noted that with majority of firms quickly adapting to working from home, the pandemic had proven that most roles which had not previously been performed from home could be. It had also allowed management, compliance and regulatory functions to get more comfortable, from a risk perspective, with large volumes of staff working remotely. It was noted that, in some ways, working from home benefitted staff in terms of better work-life balance, travel costs and flexibility as well as benefitted firms in terms of reduced real estate costs. Mr Kaye highlighted that despite this, office working can be better from a creativity and collaboration perspective and that the future of work will likely require a combination of both office and home working.

Members discussed how organisations will need to look to understand their staff’s needs, in terms of working preferences, as well as provide technology to effectively facilitate hybrid working. It was noted that organisations which are less flexible in offering hybrid working arrangements may be less competitive in terms of attracting and retaining talent. Organisations’ ability to measure staff on a level playing field in a hybrid environment, productivity challenges and remote-only working were also discussed.

Item 6 – LIBOR Transition Update

Arif Merali and Alieda Moore (Bank of England) provided an update on the LIBOR Transition, with a focus on transition in the cross-currency swaps market. On 5 March 2021, the Financial Conduct Authority (FCA) announced that all LIBOR settings would either cease to be provided or no longer be representative, immediately after: 31 December 2021 in the case of all GBP, EUR, CHF, JPY and 1- week and 2-month USD LIBOR settings; and 30 June 2023 in the case of remaining USD LIBOR settings. Ms Moore highlighted that supervisory guidance had been issued by US authorities regarding limiting new use of USD LIBOR after end-2021 and that this had been supported by both the PRA and FCA in a letter to CEOs in March 2021 and by the Financial Stability Board.

Ms Moore presented a roadmap, including key milestones over the course of the year, noting that while good progress had been made in ceasing new use of sterling LIBOR in most core markets by end-Q1 2021, there is now a focus on completing active transition, where viable, by the end of the third quarter to increase certainty of contractual terms ahead of cessation.

Mr Merali outlined the recent market updates and developments, including how sterling cash markets, linear derivatives, futures and non-linear derivatives and US dollar markets were progressing with the LIBOR transition.

It was noted that the majority of new GBP LIBOR borrowing and issuance should have ceased, and that market participants should continue to focus on transition away from LIBOR ahead of cessation and the deadline to cease new use of USD LIBOR at the end of the year. The CFTC’s announcement of a ‘SOFR First’ initiative to switch interdealer swaps trading from USD LIBOR to SOFR was highlighted and the Bank of England is interested in discussing what steps can be taken to support a further move to risk-free-rates in cross-currency markets.

Item 7 – CLS Update

John Hagon (CLS) noted Eurex is now live but is not currently processing any live business through CLS. There are still only 2 live participants of CLSNow with a small pipeline of members scheduled to join in the future. Mr Hagon highlighted that in relation to CLS Convergence, CLS plans to migrate to the new platform on 26 June. It was noted that members do not need to take any actions over the cutover weekend, but should test connectivity as soon as possible when service is brought up on the Sunday. Mr Hagon explained that relevant individuals at member organisations will be aware of the migration and should be on a heightened state of internal alertness, although the transition is expected to go smoothly.

Mr Hagon noted that CLS continues to work with global settlement members to better understand how FX trades are settled in CLS eligible currencies and to gain a better understanding of factors influencing non-PvP (Payment Versus Payment) settlement.

Item 8 – SWIFT Update

Neil Buchan (SWIFT) highlighted that many global organisations and infrastructures are looking to replace their legacy message formats with ISO20022footnote [4] for financial communications. Mr Buchan noted that there is a global shift happening within the payment messaging space, with 80% of global high value payment systems planning to adopt ISO20022 by 2025.

SWIFT announced their migration to ISO20022 in 2018 and that this would be primarily for SWIFT MT Category 1, 2 & 9 messages. SWIFT are planning for the new messaging format to co-exist with the legacy messages for approximately three years, from October 2022 to November 2025 before moving to only ISO20022 messaging.

Mr Buchan noted that some of the benefits in using ISO20022 include: customer experience; better transaction management; backward capability; richer data; and the introduction of API (Application Programme Interfaces).

Item 9 – Education & Outreach


Steve Forrest (UBS) provided members with an overview of the topics discussed by the European Central Bank (ECB) Operations Managers Group (OMG) meeting on 17 March. Mr Forrest noted the discussion included: the possibility of a digital euro and central bank digital currencies; crypto currencies; trading Bitcoin NDFs (non-deliverable forward); and the impact of algorithm execution on operations. Mr Forrest highlighted that members also discussed hybrid working, as well as the benefits that working from home has brought in terms of accelerating change in areas such as e-signatures.

ii. GFXD Update

Mr Forrest provided an overview of topics discussed by the Global Financial Markets Association (GFMA) Global Foreign Exchange Division (GFXD) meeting in May. These included the future of FX, including new technologies and developments, the introduction of crypto currencies, central bank digital currencies as well as private and public stable coins.

Item 10 – Any Other Business

Mr Blythe welcomed volunteers for future presentations on member firms’ FX operations. The FXJSC Secretariat highlighted the upcoming annual contingency call test ahead of the next Operations Subcommittee meeting.

Next FXJSC Meeting: 15 September 2021


Alison Kett (alternate) – Bank of England

Andrew Rogan – UK Finance

Babatunde Carew – FCA

Boyd Winston – JP Morgan

Claire Forster-Lee – Morgan Stanley

Daniel Horgan – Citigroup

Gail Smith – RBC

Gavin Platman (Deputy Chair) – Insight Investment

James Kaye – HSBC

Joe Halberstadt – SWIFT

John Blythe (Chair) – Goldman Sachs

John Hagon – CLS

Kerry Peacock (Deputy Chair) – MUFG Bank

Sharon Chapman – Barclays

Steve Forrest – UBS

Terri Van Praagh – Northern Trust

FXJSC Secretariat

Alice Hobday – Bank of England

Devin Bennie – Bank of England

Grigoria Christodoulou – Bank of England

Lauren Hustwitt – Bank of England

Matthew Hartley (Legal Secretariat) – Bank of England

Guest attendees

Alieda Moore – Bank of England

Arif Merali – Bank of England

Jonathan Sepanski – Bank of England

Mark Houseago – CLS

Neil Buchan – SWIFT

Orlando Fernandez Ruiz – Bank of England


Adam Jukes – Deutsche Bank

Matt Dukelow – Bank of England

Mike Irwin – XTX Markets


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