FMR Publications

The Fair and Effective Markets Review is now in review mode, looking at all the industry responses. There are multiple mentions of MiFID, MAR and various codes of conduct within the body of the FEMR paper. It is so clear that the regulators are asking the industry to take a lead on demonstrating an industry-wide approach or even solution to conduct risk. If we can't find an approach ourselves, then get ready for an imposed solution which will be far more disruptive than anything we would come up with. Here is the FMR Advisory response.

This report from the FSB a few years ago looks into progress made by the Industry towards the best practice outcomes they previously outlined. Whilst there has been significant progress, more work does remain.

The extension of the Senior Managers and Certification Regimes into the wider wholesale markets has had yet another huge effect on market participants. This is far more than a simple copy / replace of the Approved Persons Regime. FMR Advisory held a Round Table for the investment community to discuss some of the implications on their business.

Following on from the furore over ‘bad behaviour’ at the LIBOR and FX Fixings, regulators are focusing in on conduct. It is no longer acceptable to approach the business with an attitude of “what can I get away with?” - The new approach has to be “is this the correct way to behave?”. At this FMR Advisory Round Table participants from the banking, legal and broker communities held a highly topical and interesting discussion, highlighting a number of key themes.

Over the last months of 2014 the topic of conduct risk, behavioural risk, and general management concern around how to demonstrate to the regulators that a given business is behaving correctly, has come up again and again. As the conversations have focused in on areas of concern, the topic of “last look” and how price makers manage the risk of e-distribution of prices was attracting attention. This round table was set up specifically to tease out the background to this methodology, the implementations, some potential issues such as they are; and any potential remedial approaches.

Since the first Round Table that focused on Last Look in December 2014, the general focus across the world into this topic ramped up enormously. Regulators were looking at the implementation and law suits were in preparation. This report summarises discussion into this topic that follows on from the previous Round Table, in particular Last Look within and across multilateral pricing environments.

Since then there was a lot of talk about how to handle Last Look, but even today this remains a murky area. Now more than ever it is vital that the industry demonstrates best practice.

SEB, registered as a Swap Dealer, requested FMR Advisory to set up a Round Table to discuss how non-US Swap Dealers are managing compliance with the many rules, some being subject to no-action relief letters. Swap Dealers do not wish to be unwitting outliers in their interpretation of elements of the CFTC implementation and the group was able to take comfort from knowledge around some areas of shared approach; such as in reporting thresholds of materiality or mid-price communication to clients who push back on receiving it.

An original Thomson Reuters published paper, authored by Robin Poynder, that highlighted the risk that poor behaviour can have on operational risk - published in December 2012.