Model Code and Dealing Ethics for the CTP Exam
Which body issues which code, and the specific rules the exam picks from each.
A dealing room handles large sums on the phone and on screen in seconds, so markets run on written codes as much as on law. Module VI of the Certified Treasury Professional (CTP) syllabus covers them: the dealer's code of conduct, dealing through brokers, customer suitability and appropriateness, the code for submitting rates to financial benchmarks, the code for dealing on NDS-OM, and the roles of FEDAI and FIMMDA.
Most exam questions here are recall. The skill is knowing which body issues which code and the handful of specific numbers each one contains.
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Who Issues Which Code
FEDAI
Full name
Foreign Exchange Dealers' Association of India
Code it issues
FEDAI Code of Conduct: the FX Global Code plus the FEDAI Addendum
Covers
Forex dealers and brokers
FIMMDA
Full name
Fixed Income Money Market and Derivatives Association of India
Code it issues
Code of Conduct for transacting on NDS-OM
Covers
Government securities trading on RBI's NDS-OM
FIMMDA
Full name
As above
Code it issues
Code of Conduct for Dealers and Brokers in Interest Rate Derivatives
Covers
OTC rate derivatives
FIMMDA
Full name
As above
Code it issues
Code of Fair Practices for Debt Markets (2018)
Covers
Conduct in bond and money markets
FBIL
Full name
Financial Benchmarks India Ltd
Code it issues
Unified Code of Conduct for Submitters of all Benchmarks
Covers
Banks that submit rates for benchmarks
RBI
Full name
Reserve Bank of India
Code it issues
Suitability and appropriateness rules in its derivative directions
Covers
Banks selling derivatives to users
| Body | Full name | Code it issues | Covers |
|---|---|---|---|
| FEDAI | Foreign Exchange Dealers' Association of India | FEDAI Code of Conduct: the FX Global Code plus the FEDAI Addendum | Forex dealers and brokers |
| FIMMDA | Fixed Income Money Market and Derivatives Association of India | Code of Conduct for transacting on NDS-OM | Government securities trading on RBI's NDS-OM |
| FIMMDA | As above | Code of Conduct for Dealers and Brokers in Interest Rate Derivatives | OTC rate derivatives |
| FIMMDA | As above | Code of Fair Practices for Debt Markets (2018) | Conduct in bond and money markets |
| FBIL | Financial Benchmarks India Ltd | Unified Code of Conduct for Submitters of all Benchmarks | Banks that submit rates for benchmarks |
| RBI | Reserve Bank of India | Suitability and appropriateness rules in its derivative directions | Banks selling derivatives to users |
The Current FEDAI Code
FEDAI's Special Circular SPL-01/COC/2025 of 8 May 2025 says its Managing Committee, on 29 April 2025, adopted the December 2024 version of the FX Global Code together with the existing FEDAI Addendum as the revised FEDAI Code of Conduct. The FX Global Code is a global set of principles; the Addendum adds the Indian rules below.
What the FEDAI Addendum Requires
- check_circleA Foreign Exchange Dealers' and Brokers' Guidance Committee, chaired by the Chairman of FEDAI with the Chairman of FEBAI (the brokers' association) as Vice-Chairman, plus three bank and two broker association representatives.
- check_circleThe Committee monitors the market, issues guidelines on practice, investigates breaches and recommends action, including punitive measures, to FEDAI.
- check_circleLate deals, done after the back office has closed recording for the day, are marked as such, included in that day's position, and the slip passed at once to an official not connected with the dealer.
- check_circleBrokers may not deal on their own account or hold an exchange position, in line with RBI guidelines.
- check_circleA broker who cannot honour a firm quote closes at the next available price and pays the difference by cheque. Promising better rates on future deals instead is not allowed.
- check_circleDealers do not pass brokerage bills, nominate brokers, or share brokerage with brokers not involved in the deal. Brokers may not waive brokerage.
- check_circleA broker breaching the code faces a penalty of up to ₹50,000, plus any loss caused, and can be suspended. Participants who do not subscribe to the code cannot operate in the market.
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Dealing on NDS-OM
NDS-OM (Negotiated Dealing System, Order Matching) is RBI's anonymous electronic platform for secondary trading in government securities, launched on 1 August 2005 and hosted by CCIL for RBI. Orders match on price, then time: at the same price, the order entered first trades first. Counterparties never see each other, before or after the trade.
FIMMDA's code for NDS-OM covers how participants place and manage orders, and its scope extends to OTC deals reported on NDS-OM. Its thrust: quotes must be genuine, and orders must not be placed to mislead the market into trading at off-market levels.
Benchmark Submission Rules (FBIL Code)
- check_circleSubmitters and reviewers must not disclose a submission to anyone before the administrator publishes it, or try to influence anyone else's submission.
- check_circleAll communication about submissions must be on recorded lines or systems.
- check_circlePeople involved in submission must not hold parallel responsibilities that conflict with it.
- check_circleRecords of the submission process must be kept for at least eight years.
- check_circleEach contributing entity confirms compliance to the benchmark administrator half-yearly, as on 31 March and 30 September.
Customer Suitability and Appropriateness
RBI's derivative guidelines ask every market-maker bank to adopt a board-approved Customer Appropriateness and Suitability Policy. Before selling a derivative, the bank checks that the product suits the user and that the user has the authority to enter into it. If the bank thinks a deal is inappropriate, it must say so; if the user still goes ahead, the bank documents its analysis and the discussion.
RBI's Master Direction on foreign exchange derivative contracts splits users into retail and non-retail. Non-retail includes regulated financial entities and resident users with a net worth of at least ₹500 crore or turnover of at least ₹1,000 crore; everyone else is retail. Retail users get a narrower product list and must be shown the mid-market mark before the deal.
FAQs
Who issues the code of conduct for forex dealers in India?expand_more
FEDAI. Its Code of Conduct is the FX Global Code (December 2024 version) plus the FEDAI Addendum, adopted in April 2025.
Can a forex broker deal on its own account?expand_more
No. Under RBI guidelines, brokers may not deal on their own account or hold an exchange position. Banks must report any such case to the Guidance Committee.
What does FIMMDA do?expand_more
FIMMDA is the market body for the bond, money market and rate derivative markets. It issues the codes of conduct for NDS-OM, for interest rate derivative dealers and brokers, and the Code of Fair Practices for Debt Markets. It also co-issues the CTP certificate with IIBF.
How long must benchmark submission records be kept?expand_more
At least eight years, under FBIL's Unified Code of Conduct for Submitters.
What is customer appropriateness in derivatives?expand_more
A bank's duty to check that a derivative suits the user, and that the user has the authority to deal in it, before selling it. RBI requires a board-approved policy for this.
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