It is also designed to reflect current market practice, with clear guidelines on communication between participants and on trade-execution practices—two areas of weakness highlighted by the scandal.
Managers of FX traders will now be enjoined to limit access to confidential information, and to ensure that clear guidance has been given on approved channels of communication.
Greater disclosure is also demanded on how orders are processed, so that clients will never lose oversight and control of their trades.
The code will, however, be voluntary.
Guy Debelle of the Reserve Bank of Australia, who led the drafting, reckons that to write binding rules for a global market would have been more convoluted and less effective.
Principles, he argues, are harder to exploit or ignore than rules.
Alongside the code itself, the FXWG has developed a blueprint for adoption, which makes those active in the market responsible for embedding the code in their day-to-day operations.
Central banks have committed themselves to leading by example, by implementing the code for their own FX activities.
Consideration is being given to maintaining public registers of those who have signed up.
“I wouldn't underestimate the impact of peer pressure in improving behaviour,” says MrDebelle.
Given the painfully low level of trust in foreign-exchange and other financial markets, central bankers are adamant that codes like these must not be ignored or allowed to become outdated.
The new global FX committee will monitor the success of the project and consider the case for further updates.
But the incentives for adherence do not seem compelling.
Whether the code actually prevents market malfeasance will be determined by the many institutions, large and small, that trade FX each day.
And, as the market has proved in the past, it is important not to underestimate the power of peer pressure to worsen behaviour as well as improve it.