FEDAI Code of Conduct
The FX Global Code plus FEDAI's Indian addendum: the conduct rules every forex dealer signs up to.
FEDAI, set up in 1958 as the self-regulatory association of banks dealing in foreign exchange, does more than publish rate rules. It also sets the standard of behaviour for everyone in India's interbank forex market: bank dealers, brokers and electronic platforms. That standard is the FEDAI Code of Conduct.
The Code is not written from scratch. It adopts the FX Global Code, the international set of good-practice principles for wholesale forex markets, and adds a FEDAI Addendum with rules specific to the Indian market.
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What the Code Is Made Of
The FX Global Code is maintained by the Global Foreign Exchange Committee (GFXC), set up in May 2017 by central banks and private-sector participants. The current version is dated December 2024 and carries 55 principles under six headings. It does not create legal obligations by itself; it supplements local law.
FEDAI adopted the Global Code together with its Addendum in 2017, replacing its earlier code, and has updated it since. Its most recent circular on the Code is SPL-01/COC/2025 dated 8 May 2025. Under FEDAI's general rules, every member must abide by the Code, submit a Statement of Commitment, and confirm each April that it has obtained the prescribed statement from all concerned employees.
The Six Leading Principles
| Principle | What market participants are expected to do |
|---|---|
| Ethics | Behave ethically and professionally to promote the fairness and integrity of the market |
| Governance | Have a sound governance framework with clear responsibility and oversight of FX activity |
| Execution | Take care when negotiating and executing deals so the market stays fair, open and transparent |
| Information Sharing | Communicate clearly and accurately, and protect confidential information |
| Risk Management and Compliance | Maintain a robust control and compliance environment to identify, manage and report risk |
| Confirmation and Settlement | Run robust, efficient post-trade processes so deals settle smoothly and on time |
The FEDAI Addendum: Rules Specific to India
As published by FEDAI in 2017, the Addendum covers:
- Dealers' and Brokers' Guidance Committee
- A forum for dealers and brokers. The FEDAI Chairman chairs it and the Chairman of the Foreign Exchange Brokers' Association of India (FEBAI) is Vice-Chairman. Members are three bank representatives and two from the brokers' association. It issues market-practice guidelines, investigates breaches and recommends action, including punitive measures, to FEDAI.
- Written acknowledgement
- Dealers, brokers and employees of market participants acknowledge in writing that they have read, understood and will observe the Code. Participants that do not subscribe cannot operate in the market.
- Late deals
- Deals concluded after the back office closes are marked late, included in that day's position, and the slip goes immediately to an official unconnected with the dealer.
- Brokers' differences
- A broker who cannot honour a firm quote closes at the next available price and pays the difference by cheque. It must not compensate the bank with promises of better rates later.
- Broker positions
- Brokers cannot deal on their own account or hold an exchange position. Banks report any broker doing so to the Guidance Committee.
- Fictitious rates
- Any dealer or broker quoting or encouraging off-market rates is reported promptly to the Guidance Committee.
- Brokerage
- Dealers do not pass brokerage bills, do not nominate brokers, and pay brokerage only to brokers actually involved in a deal.
Guidance Committee, mark-up and late deal rules. No signup.
Mark-Up and Last Look
- check_circleMark-up is the spread or charge built into a customer's all-in price. Under Principle 14 it should be fair and reasonable, and clients should be told that their price may include it.
- check_circleA bank acting as principal has no obligation to disclose the amount of its mark-up. If it chooses to disclose, the figure must be truthful. The FEDAI Addendum illustrates this with a bank that adds one mark-up and states a smaller one: a breach.
- check_circleLast look is a window on electronic platforms in which the price-giver can accept or reject a trade request. If used, it should be a risk control, disclosed to clients, and not used to gather information or trade ahead of the client.
How CCFE Tests This
The paper asks factual questions on the Addendum (who chairs the Guidance Committee, its bank-to-broker composition, where a late deal slip goes) and applied questions on the Global Code (is a mark-up disclosure acceptable, what must a participant confirm). The usual trap is the mark-up question: candidates pick 'must always disclose', when the rule is no duty to disclose but a duty to be truthful if you do.
FAQs
What is the FEDAI Code of Conduct?expand_more
The conduct standard for India's interbank forex market. It consists of the FX Global Code, adopted by FEDAI, plus a FEDAI Addendum with India-specific rules, and applies to banks, brokers and electronic platforms.
What are the six principles of the FX Global Code?expand_more
Ethics, Governance, Execution, Information Sharing, Risk Management and Compliance, and Confirmation and Settlement.
Who sits on the FEDAI Guidance Committee?expand_more
Under the 2017 Addendum, the FEDAI Chairman as Chairman, the FEBAI Chairman as Vice-Chairman, three bank representatives and two representatives of the brokers' association.
Must a bank disclose its mark-up to a customer?expand_more
No. A bank acting as principal need not disclose its mark-up, but any disclosure it does make must be truthful.
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