The Bank of England (BoE) has published a speech by Andrew Hauser, Director of Market Strategy at the BoE and head of the Fair and Effective Markets Review (FEMR) secretariat. In his speech Mr Hauser highlights some of the areas where the responses to the FEMR consultation on the fairness and effectiveness of fixed income, currency and commodities markets (FICC) identified scope for change:

  • improved understanding of what ‘acceptable market practice’ means in FICC;
  • standards of individual professionalism;
  • governance, controls and incentives (culture) within firms; and
  • ways for firms to catch misconduct.

Mr Hauser mentions that perhaps the clearest message to come through the responses was a recognition that the collective understanding of, and adherence to, appropriate standards of market practice has been inadequate in key FICC markets. One respondent identified certain reasons for this:

  • that codes and regulations and other sources of information across activities, geographies and types of firm were overlapping, contradictory, difficult to navigate and/or not fully consistent;
  • there was limited interpretation of high level principles into practical guidance;
  • firm-led communication and training on codes, policies and procedures was not always sufficiently robust;
  • adherence to standards was not adequately reflected in forms’ incentive and promotion policies or decisions; and
  • whilst firms had in many cases sought to address these issues in recent years, each had tended to approach the problem in its own way creating further complexity.

View From darkness cometh light? Some early messages from the Fair and Effective Markets Review consultation responses, 24 February 2015