FMSB, FCA, Bank of England, Sign MoU

The FICC Markets Standards Board (FMSB), Bank of England and Financial Conduct Authority (FCA) have announced signing a tri-party Memorandum of Understanding (MoU), which sets out a high-level framework formalising the continuing cooperation between the three in relation to the delivery of FMSB’s primary objectives as recommended in the Fair and Effective Markets Review final report.

The BoE and FCA support the primary objectives of FMSB which are to promote fair and effective global wholesale FICC markets; to produce clear guidance on how business should be conducted to eliminate or mitigate vulnerabilities; and to promulgate such guidance as widely as possible globally and obtain commitments for its use.

Under the MoU, FMSB will liaise and report to the Old Lady and FCA on its strategy, provide regular updates on its activities, and provides drafts of its proposed Standards and Statements of Good Practice, although this does not necessarily mean the publications are automatically endorsed by the authorities.

“I am pleased that we have an agreed MoU that builds on our working relationship with FMSB to date and sets a clear framework for how we will continue to cooperate in the future,” says Andrew Bailey, governor of the Bank of England. “The FMSB was a key recommendation of the Fair and Effective Markets Review, and we strongly support its primary aim of raising standards of conduct so that global FICC markets are more transparent, fair and effective. The FMSB plays an important role in engendering confidence and trust from users and the public.”

Nikhil Rathi, FCA CEO, adds, “We fully support the FMSB in meeting its important objective to identify areas of vulnerability and develop clear and practical guidance that complements the evolving regulatory framework. This MoU sets out the basis for how we will continue working together to raise standards and promote fair and effective global wholesale FICC markets.”

The report also lays out how meetings to discuss the progress of Standards and Statements of Good Practice. A “closed” session will be attended by contractual FMSB members only with occasional attendance from third-parties, and will review first drafts. Conversely, as Standards and Statements progress, “open” meetings will be held, to which the UK authorities will be invited as an observer.

“FMSB was created in response to recommendations made in the Fair and Effective Markets Reviewconducted jointly by the Bank of England, FCA and HM Treasury,” says Mark Yallop, chair of FMSB. “It has made significant progress against its goals, and the FMSB Board is very grateful for the time, dedication and support provided throughout by the Bank and FCA. I am delighted that we have agreed an MoU that sets out a high-level framework for our continuing cooperation as FMSB, through its members, seek out and address areas where misconduct and poor business practice reside.”

Myles McGuinness, FMSB CEO, adds, “FMSB’s strategic goals, to promote fair and effective markets for all participants, align closely to those of the regulatory authorities, policy makers and supervisors both in the UK and around the world. I am very pleased that this MoU clarifies our ongoing important relationship with the FCA and the Bank of England and look forward to establishing similar arrangements with key regulatory authorities in other jurisdictions as our membership expands into new areas of wholesale FICC markets activity.”