On 10 June 2015, the Bank of England (“BoE”), HM Treasury (“HMT”) and the Financial Conduct Authority (“FCA”) published the final report on the “Fair and Effective Markets Review” which had been launched one year ago with the aim of reinforcing confidence in the wholesale fixed income, currency and commodity (“FICC”) markets. During this period, a wide consultation was carried out with many entities and organisations, including some based outside the UK.
The report provides an analysis of the causes of recent market misconduct and other sources of perceived unfairness in FICC markets and evaluates the impact of reforms already in force or underway. It sets out 21 recommendations for further work and action.
The report states that its recommendations are shaped around the following key principles:
- individuals active in FICC markets should be more accountable for their actions;
- firms active in FICC markets should take greater collective responsibility for developing and adhering to clear, widely understood and practical standards of market practice, in regular dialogue with the authorities;
- the UK authorities should extend the regulatory perimeter, broaden the regime holding senior management to account and toughen sanctions against misconduct;
- international authorities should collaborate to raise standards in global FICC markets;
- market participants and authorities should work together in the years ahead to (i) promote fairer FICC market structures while also enhancing effectiveness and (ii) ensure a more forward-looking approach to the identification and mitigation of conduct risks.