FX Committee reviews ISDA definitions and market infrastructure
The Bank of England's FX Joint Sub-Committees discussed updates to ISDA FX Definitions, Swift's ISO20022 migration, and the impact of T+1 securities settlement. The meeting also covered resilience communications and regulatory updates.
Modernizing FX Definitions for a Digital Era
The International Swaps and Derivatives Association (ISDA) presented proposed changes to its FX Definitions, informed by a 2023 market survey.
The updated definitions are slated for publication in early March 2026, with a go-live target of November 2027, aligning with a Swift release.
Key changes include digitised definitions for easier updates and the integration of ISDA and EMTA definitions.
Major updates address deliverable disruption events and fallbacks, introducing three core events plus one optional, alongside APAC-specific events.
The calculation agent standard will be updated from the 2021 rates definitions, and provisions for automatic exercise and novation will see changes.
"Unexpected holidays" are now termed calendar adjustment events, an optional feature.
Structural simplifications to matrices will consolidate EMTA template terms and introduce new matrices for developed market currency pairs and settlement rate options.
The aim is for firms to rely less on Master confirmations due to comprehensive provisions in the Main Book and Matrices.
A draft for feedback is expected by December 10, 2025.
Market Infrastructure Adapts to New Realities
The meeting also provided updates on critical market infrastructure.
Swift reported the successful completion of its ISO20022 migration in November 2025, with 80-90% pre-migration.
The focus now shifts to Cat 3 message updates for the November 2027 ISDA changes.
CLS noted an increase in average daily volumes to USD8.5 trillion and a successful annual market-wide disaster recovery test involving 76 members.
CLSNet expansion is paused to prioritize a USD/CNH Payment-versus-Payment (PvP) solution, alongside efficiency improvements like reducing pay-in grids.
CLS is also actively testing AI use cases in a sandbox.
The Global Foreign Exchange Committee (GFXC) is preparing for a virtual meeting on December 5-6, 2025, with agenda items including the impact of T+1 securities settlement on the FX market, a panel on stablecoins, and IOSCO's pre-hedging report.
The Financial Conduct Authority (FCA) published a consultation to remove FX derivatives from UK transaction reporting, open until February 20, 2026.