FICC Markets Standards Board Issues 2019 Annual Report
The FICC Markets Standards Board (FMSB) has today issued its 2019 Annual Report setting out the progress made to enhance standards of behaviour in the wholesale fixed income, currencies and commodities (FICC) markets and its priorities for the year ahead.
FMSB is a private sector, practitioner-led organisation whose membership collectively accounts for a substantial share of the business conducted in wholesale FICC markets worldwide.
The Annual Report gives an overview of the work undertaken by FMSB during 2019 in pursuit of the four strategic goals set out in the Fair and Effective Markets Review, which was conducted jointly by HM Treasury, Bank of England, and Financial Conduct Authority:
Identifying global market vulnerabilities through scanning the horizon for emerging business practice risks
Developing best market practice through the production of standards and other materials that create a common understanding
Driving global adherence through ensuring standards are comprehensible and practical
Developing consistent approaches to market practices through identifying gaps and inconsistencies in existing regulatory standards and working with other standards setting bodies
Alongside the five Standards and ten Statements of Good Practice already published, FMSB has a significant amount of work in progress and planned for the year ahead to support its strategic goals, including:
Developing and publishing further Standards, Statements of Good Practice and Spotlight Reviews
Looking at the impact of FMSB Standards to understand how business practices are changing in response
Finalising a series of publications on the role of data in ensuring fair and effective FICC markets
Exploring IBOR benchmark reform and the remaining risks and issues that could arise as the industry transfers to alternative risk-free rates
Looking at the commodities markets in metals and energy through the recently established working groups in these areas
Assessing the viability of creating a series FICC market practice training programmes that could be recognised across institutions and locations
Mark Yallop, Chair of FMSB said:
“FMSB has achieved a great deal since it was created, and in 2019 we made significant progress against our central objective of raising standards of conduct in global wholesale FICC markets so that they are more transparent, fair and effective for all participants. We now have 15 published Standards or Statements of Good Practice, with more in the pipeline.
“We are continuing to scan the horizon for new vulnerabilities, recognising that markets are evolving constantly and we see new challenges today that didn’t exist when FMSB was created, including the opportunities and potential hazards afforded by new technology, in particular the growth of machine learning and data science.
“We have a significant amount of activity planned for 2020, including our focus on assessing the potential risks that could arise with the replacement of IBOR with other near risk-free rates. This is a clear example of FMSB’s important role in global markets.
“As a network organisation, we rely on expert market practitioners from across member firms. They commit their time, dedication, and insight to the FMSB, and I would like to thank all our members and their people for the strong commitment and support we receive.”
FMSB continues to receive strong support from UK and international central banks and regulatory bodies. Alongside others, Mark Carney, Andrew Bailey and Ashley Alder expressed their support for the work of FMSB in the Annual Report.
Mark Carney, Governor of the Bank of England, said: “A new economy is emerging, driven by immense changes in technology, the reordering of global economic power, and the growing pressures of climate change. This transition needs markets that are effective and fair and that balance innovation and resilience. I support the FMSB’s work to achieve that goal. The private sector is responsible for supporting competition in FICC markets and managing conduct risks. By developing standards on transparency and fairness, the FMSB promotes the new finance needed for the new economy.”
Andrew Bailey, CEO of the Financial Conduct Authority, said: “The FCA always and only regulates in the public interest. We place the strongest emphasis on outcomes and principles, and understand that rules alone cannot deliver these particularly in wholesale markets that are global in nature. The FCA sees the FMSB’s role as a practitioner-led standards setter as an important supplement to the regulatory framework to improve business practices and rebuild trust in the financial system. The FCA supports the FMSB’s ambitious workplan to deliver more transparent, fair and effective global wholesale markets.”
Ashley Alder, Chair of IOSCO Board said: “Eight years have now passed since multiple conduct failures in wholesale finance first came to light, resulting in unprecedented fines and other sanctions. In response, FMSB has been unrelenting in harnessing the deep expertise of its participants to develop a series of detailed, actionable industry standards aimed at restoring confidence and trust in FICC markets. IOSCO commends and supports this important work.”
Volumes of sustainable debt surpassed $1.6 trillion in 2021.
Growth was driven largely by the 19% rise in interest rate products.
The consolidated quote system for corporate bonds has raised funds to expand outside the US.
U.S. Treasury has issued over $450bn of 20-year bonds since May 2020.
SEC requires a review of data on non-listed securities before initiating or resuming quotes.