This chapter examines the nature and structure of FX Prime brokerage relationships from the perspective of the client, the export traders and the primeur broker himself. Several other principles of the Code, which are not limited to early brokerage, explicitly discuss how they apply in this context. The objective of the Code is to promote the integrity and proper functioning of the wholesale foreign exchange market. The Code will apply to “market participants”4, a term defined to encompass most categories of participants operating in the wholesale foreign exchange market as a regular part of their business and generally expected to cover financial institutions, asset managers, sovereign wealth funds, hedge funds, pension funds, insurance companies, corporate treasury services, non-bank liquidity providers. Executing entities, brokers, aggregators, e-trading platforms and, unless this hinders the fulfillment of their legal obligations or political mandates, central banks and supranational organizations. Principle 19 (Identification and adequate restriction of access to confidential information): Early brokers should have an appropriate level of separation between their prime brokerage transactions and their other sales and trading activities, including appropriate information barriers, and should be transparent about the standards they require and adopt. Principle 26 (risk management framework): The risk management and compliance framework of market participants should take into account prime brokering activities. Brokers “are encouraged to engage in constant dialogue with those for whom they offer credit intermediation. highlight expectations of appropriate market behaviour. Foreign Exchange Prime Brokerage is a credit intermediation service in which a primeur broker, in its simplest form, allows its clients to seek liquidity in foreign currency (“FX”) transactions from an executing trader among others with whom the primeur broker has a “give up” relationship, so that as soon as the client and the trader-exporter have committed to a transaction and trading has passed to the broker. first and accepted by it.
that is what will happen. Between the first broker and his client, on the one hand, and the prime broker and the executive dealer, on the other hand, this results in corresponding settlement operations, so the exporting trader does not bear any credit risk towards the client of the first broker. . . .
