FMSB Publishes Front Office Supervision SGP
Posted by Colin Lambert. Last updated: January 15, 2025
The Financial Markets Standards Board (FMSB) has published its updated Statement of Good Practice (SGP) for front office supervision of wholesale markets – the latest document replaces the original best practice guidance published in 2017.
The new guidance offers 15 best practice statements under five broad themes, and is aimed at helping firms meet challenges to supervision that have emerged since 2017 amid evolving regulation, new working practices and technological change.
These include the establishment of clearer support for the role of a supervision framework; the clarification of the concepts of supervision, responsibility and controls; the specification of the roles and responsibilities of a supervisor and the standards expected; and additional clarity around reasonable spans of supervision.
The new SGP also addresses conflicts of interest including those that may arise from delegation; suggests measures to judge the effectiveness of supervisors in their role as well as to assess the quality and context of the information provided to those supervisors. It also provides guidance for assessing supervisory data and related responsibilities for quality and proportionate controls.
“We would like to thank our members, led by Chris Dickens, head of non-financial risk for HSBC’s Markets and Securities Services, as working group chair, for their sustained effort in providing their expertise and time to produce this comprehensive update,” says Myles McGuinness, CEO of FMSB. “We would also like to extend our thanks to KPMG, who helped us develop the original guidance, and provided significant assistance again.
“Effective supervision of trading in wholesale markets is key to maintaining fair and effective markets and it’s essential that the industry continually collaborates on how to approach emerging challenges,” he continues. “We will be taking forward our work with members in this area this year by examining how firms are approaching and monitoring the issue of trading controls.”
Dickens adds, “I am pleased that FMSB is able to publish this Statement of Good Practice given the key role that supervision plays in the control framework of a trading business. Given the quality of input from FMSB member firms to our working group, supported by KPMG, I’m sure the document will prove valuable to firms in assessing their own approaches to supervision.”
The full document can be accessed here.