US foreign exchange dealers revise operational risk standards
The Foreign Exchange Committee, a 20-dealer industry liaison group to the New York Federal Reserve Bank, has made new recommendations for the exercise of in-the-money foreign exchange options in a revision to its 1996 forex operational risk best practices document, released last week.
The revised document says determination of option in-the-moneyness and the subsequent notification of counterparties should be performed by an auditable electronic system. The document goes on to say that exercising options should be “segregated from sales and trading and performed by staff
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