Minutes of the London FXJSC Operations Sub-committee Meeting – 20 November 2024

Minutes

Item 1 – Welcome and Apologies

James Kaye (Chair, HSBC) welcomed new members James Hull (MillTech FX), Nimit Jobanputra (Deutsche Bank) and Gary Cunningham (Insight Investment). The Chair also welcomed guest presenters Adam Bealey (Swift), Paige Benattar, Harry Walker and Regis Bouther (Bank of England). The Chair thanked outgoing members Gavin Platman (Insight Investment) and Mark Codling (Deutsche Bank) for all their contributions as members of the committee.

The Chair noted apologies from John Hagon (CLS), Kerry Peacock (MUFG), Aaron Mills (Citadel), James Andrews (JP Morgan) and Andrew Batchelor (LCH).

Item 2 – Minutes of the September Meeting and Feedback from the September Main FXJSC Committee Meeting

The minutes from the 18 September 2024 meeting were agreed by Committee members. The Chair provided an overview of the September Main Committee meeting^{footnote [1]}, noting that the Bank of England had presented the discussion paper on the approach to innovation in money and payments published in July 2024. The Main Committee had also discussed recent operational disruptions, with members agreeing that the FX market had been resilient during the operational issues due to its diverse & fragmented nature. The April 2024 FXJSC turnover survey results were also presented.

Item 3 – Reflections on US Election

Committee members discussed the impact of the US election on their operations, with members noting some volatility in their respective client regions. Reflecting on activity in the lead up to the election, members noted that it was fairly muted and much quieter than expected.

Item 4 – Exploring longer operating hours for RTGS

Paige Benattar provided an update on the review of extending RTGS and CHAPS settlement hours, including the Bank of England’s recent discussion paper. She noted that discussions on extending settlement hours are still in the exploratory stage and that the Bank of England welcomes feedback on the issues covered in the discussion paper.

Members discussed whether the project would primarily focus on CHAPS or also consider faster payments, drawing on examples from Mexico and New Zealand. Members also expressed interest in the implications of increased settlement hours for bank holidays and how these extended hours would function. Ms. Benattar mentioned that the team is currently exploring this further, particularly how bank holiday settlement could support deferred net settlement schemes. She confirmed that the analysis covers additional settlement for all retail payment schemes, including card schemes, though the final decision to proceed will rest with each relevant payment system operator.

Item 5 – Presentation on Swift Resilience

Adam Bealey (Swift) presented an overview of Swift’s resilience framework and incident management/business continuity approach. Members reflected on the July 2024 incident and discussed how communications during a Swift incident could be more widely circulated. Mr Bealey emphasised the different channels available for communications, including Swift service alerts. He also highlighted ongoing contingency planning within Swift’s resilience framework, including the use of different operational sites should one site be affected by an incident or outage, and Swift led BCM exercises that connected institutions can participate in, e.g. the annual cold-start exercise.

Mr Bealey also presented Swift’s latest service availability statistics and noted 99.99% availability in October 2024.

Item 6 – FX Global Code and FX settlement risk data collection

Munalula Lisimba (Bank of England) gave an update on the 2024 FX Global Code review. Mr Lisimba noted that the respective GFXC Working Groups had considered the feedback from the Public Consultation^{footnote [2]} and the updated Code was expected to be published following the GFXC meeting in December 2024.

Mr Lisimba provided a brief update on the FX settlement risk data collection work. Seven central banks had taken part in the October 2024 reporting round It was also noted that the BIS Triennial survey would take place in April 2025 and include the updated approach for collecting FX settlement risk data.

Item 7 – FX Settlement Crisis Playbook

The Chair, James Kaye provided a brief update on the FX Settlement Crisis Playbook. Members discussed potential timelines for finalising the Playbook and how it might be shared globally. Members were asked to share and agree the playbook internally with their Chief Information Security Officers (CISOs).

Item 8 – SIMEX 24 Exercise

James Kaye noted that the SIMEX 24 exercise had taken place on 1 October. The simulation set out to test the UK financial sector’s ability to respond to a major infrastructure failure that would require a total shut down and restart of the sector. The FXJSC Operations Sub-Committee took part in the exercise as one of the sector response groups.

Item 9 – CLS Update

Andrew Cooper (CLS) gave an update on CLS services, noting that there had been an increase in the number of external incidents in 2023. However, he noted that year-to-date the number of external incidents had approximately halved. Mr Cooper also reminded members about an upcoming market wide dynamic cold start test of CLS on 4 December.

Mr Cooper highlighted that CLS would issue an update on the impact on CLS settlement volumes of the move to T+1 securities settlement in North America.

Item 10 – Investment Association update

Alex Chow (Investment Association) gave an update on ongoing work around the UK move to T+1 securities settlement, noting the upcoming publication of the UK Taskforce’s final report which was expected in February 2025. Mr Chow also noted work done around the International Securities Association for Institutional Trade Communication (ISITC) claims and compensation best practices and highlighted the split views amongst their membership on a potential increase in the compensation threshold from $500 to $1000.

Item 11 - GFXD Update

Steve Forrest (UBS) gave an update on the key GFXD working groups, including going into more detail on the reasons why trades that settle outside of CLSSettlement cannot be netted.

Item 12 – FCA Update

Oliver McCausland (FCA) noted that the FCA had published a policy statement (PS24/14) on bond and derivatives markets on 5 November, aimed at improving the existing post-trade transparency regime. Mr McCausland highlighted that the policy was not going to include FX derivatives within the list of Category 1 instruments that would benefit most from increased transparency.

Item 13 – Any other business

Eleanor Garret reminded members about the upcoming annual ANT (Automated Notification Tool) test, which was due to be conducted before the end of the year. Ms Garrett confirmed that colleagues from the Bank of England would be coordinating this test, which was aimed at testing whether committee members would be contactable in the event of an emergency.

The Chair noted that the next meeting will be held on 26 February 2025. Members were encouraged to bring observers in 2025.

Attendees

Alex Chow – Investment Association

Anna Chadderton – Goldman Sachs

Andrew Cooper - CLS

Andrew Batchelor – LCH

Andrew Grice – Bank of England

Claire Forster-Lee – Morgan Stanley

Daniel Hoye – Natwest Markets

Fiona O’Riordan – Citi

Gail Smith (Deputy Chair) – RBC Capital Markets

Gary Cunningham (Insight Investment)

James Kaye (Chair) – HSBC

James Hull – MillTech FX

Joe Halberstadt - SWIFT

Gavin Platman – Insight Investment

Nimit Jobanputra - Deutsche Bank

Oliver McCausland – FCA

Steve Forrest – UBS

FXJSC Secretariat

Eleanor Garrett – Bank of England

Munalula Lisimba – Bank of England

Matthew Hartley (Legal Representative) – Bank of England

Guest attendees

Adam Bealey - Swift

Paige Benattar – Bank of England

Harry Walker– Bank of England

Regis Bouther – Bank of England

Apologies

James Andrews – JP Morgan

Andrew Batchelor -LCH

John Hagon - CLS

Kerry Peacock (Deputy Chair) – MUFG

Aaron Mills - Citadel