FMSB to Update Supervision Best Practice

The Financial Markets Standards Board (FMSB) has published a Transparency Draft aimed at updating its Statement of Good Practice for Front Office Supervision of Wholesale Traded Markets.

The Standard was originally published in 2017, but FMSB says the impact of evolving regulation, the adoption of new technologies, and new hybrid operating models have meant that front office supervision faces” increasing complexities and challenges giving rise to the need for expanded and updated guidance”.

FMSB says its Conduct and Ethics Committee has convened a series of working group discussions with consultancy KPMG to consider the challenges from the changing market landscape, resulting in steps aimed at expanding and updating the original document.

These steps involve the establishment of clearer support for the role of a supervision framework; clarification of the concepts of supervision, responsibility and controls; specifying the roles and responsibilities of a supervisor and the standards expected; and providing clarity around reasonable spans of supervision.

They will also address conflicts of interest including those that may arise from delegation; measure the effectiveness of supervisors in their role; assess the quality and context of the information provided to supervisors; and assess supervisory data and related responsibilities for quality and proportionate controls.

The draft, which can be accessed here, is open for comments from the wider industry until 15 November.