The FICC Markets Standards Board (FMSB) has published a Spotlight Review which examines hybrid working risks in FICC markets.

The flexible working practices that have emerged following the onset of the COVID-19 pandemic have given rise to a number of benefits for FICC market participants. There is a desire to harness some of these benefits and allow some flexibility for front office practitioners to carry out their activities from non-office locations longer term. The extent of this flexibility will vary by firm and role.

Spotlight Review ‘Hybrid working in FICC markets – Future risk management frameworks’ examines key benefits & potential conduct risks associated with the adoption of hybrid working models & considers how firms may look to adapt risk management frameworks in light of such risks. pic.twitter.com/5FaFyRXgOh

— FMSB (@FMSB_UK) September 30, 2021

This Spotlight Review seeks to support the adoption of hybrid working models in FICC markets in a controlled way by identifying key conduct risks associated with such models and considering steps that firms can take to mitigate them.

Regulators have been clear that regulatory obligations have not changed as a result of the shift to hybrid working and this Spotlight Review therefore outlines steps that firms can take to promote equivalent conduct outcomes in a hybrid environment.

The Review categorises conduct-related risks associated with hybrid working models into five thematic categories:

1. Cultural change
2. Supervision and control impairments
3. Execution risks
4. Sharing of confidential information
5. Threats to market effectiveness

Within these five themes are a total of 43 specific risks, including risk of sub-cultures developing, reduced engagement with training, slower resolution of operating incidents, inappropriate communication channels, loss of connectivity and controlling the flow of confidential information. Potential mitigants are considered in relation to each risk.

Myles McGuinness, CEO of FMSB said: “Hybrid working models have the potential to drive a number of benefits for firms, individuals and the market more widely, including attracting a more diverse pool of people to FICC markets and improving staff wellbeing. We hope that this Spotlight Review supports firms in considering and addressing elevated risks associated with the adoption of hybrid working models.”

The Spotlight Review is available for download here: https://fmsb.com/

Source: FMSB