According to CBK, the principle focuses on six principles to which all institutions must adhere.
“The code sets out standards for commercial banks, and aims to strengthen and promote the integrity and effective functioning of the wholesale foreign exchange (FX) market in Kenya,” a statement by CBK reads in part.
“It will facilitate better functioning of the market, reinforcing Kenya’s flexible exchange rate regime for greater resilience of the economy. The FX Code is intended to promote a robust, fair, liquid, open, and appropriately transparent market”
Institutions must follow the following six principles:
- Ethics: Ethical and professional behavior when operating in the FX market.
- Governance: Implementation of a sound and effective governance framework to oversee FX market activity.
- Execution: Exercising due care when negotiating and executing transactions.
- Information Sharing: Clarity and accuracy in communication.
- Risk Management and Compliance: Development and maintenance of a robust control and compliance framework.
- Confirmation and Settlement Processes: Ensuring predictable, smooth, and timely settlement of FX transactions.
Additionally, CBK says it has enhanced regulation and market surveillance.
” CBK continues to closely monitor the market considering its growing complexity and emerging risks to fair and effective trading. It is against this backdrop that CBK has issued the FX Code.”