In order to provide more transparency, increase competition and liquidity in the foreign exchange market the National Bank of Georgia is carrying out a reform that will come into force in October 1, 2020.
The reform includes two components:
With the support of the United States Agency for International Development, international experts conducted trainings for Georgian foreign exchange market participants and developed a new regulation - the rule of foreign exchange market participants, which is based on the basic requirements of the international currency code, but at the same time takes into account the specifics of the local market.
The NBG says that both the international currency code and foreign exchange market regulations aim to increase transparency and competition, establish fair, equitable conditions for market participants and better protect the interests of their customers.
In accordance with international best practice, banks will be required to make transparent and publish full service rates and other terms on their websites, process and execute assignments in the best interests of privacy and the client. In order to maintain high standards of operations on the foreign exchange market, banks must provide appropriate organisational arrangements and IT infrastructure", says the NBG.
The second part of the reform is to launch a new trading platform of Bloomberg - Bmatch, which provides automatic matching and execution of counterparty transactions.
The NBG said that the Bmatch platform launched in Georgia back in March and is operating in test mode. At this stage, the platform is already used by 15 banks, four microfinance organisations, one large company and a foreign investment fund.
The NBG said that until the reform comes into force the banks in Georgia will have time to upgrade their infrastructure, while companies will be able to sign service contracts with one or more banks.