For foreign exchange, the FX Global Code asks market participants to use SSIs with counterparties for all relevant products and currencies where practicable. Each trade settles according to the SSI in effect on the value date. SSIs are entered, authenticated, and maintained by staff separate from trading and sales. Each SSI has a clear start date, additions and changes are approved after review by at least two people, and counterparties are notified in advance of changes1.

Using SSIs can greatly reduce the number and size of differences caused by misdirected funds (the 1998 examination manual of the US Federal Reserve Board)2.

Notes

  1. Global Foreign Exchange Committee, "グローバル外為行動規範" (FX Global Code, December 2024 version, provisional Japanese translation by the Tokyo Foreign Exchange Market Committee), Principle 51 (pages 49–50) (in Japanese). That the SSI in effect on the value date applies is from the English original, Global Foreign Exchange Committee, "FX Global Code" (December 2024), Principle 51: "settled in accordance with the SSIs in force on the value date" (the provisional Japanese translation says the date of execution). ↩

  2. Board of Governors of the Federal Reserve System, "Trading and Capital-Markets Activities Manual," Section 2060.3 "Operations and Systems Risk (Back-Office Operations): Examination Procedures" (February 1998), pages 3–4, "SETTLEMENT PROCEDURES," item 2. ↩