Wholesale financial markets review announced

12/06/2014

The Review will run for 12 months and is expected to make recommendations on:

  • principles to govern the operation of fair and effective financial markets
  • reforms to ensure standards of behaviour are in accordance with those principles
  • tools to strengthen the oversight of market conduct
  • whether the regulatory perimeter for wholesale financial markets should be extended, and to what extent international action is required
  • additional reforms in relation to benchmarks, in order to strengthen market infrastructure.

The Terms of Reference are available here.

It is noted that, in the meantime, the Government will take action domestically including:

  • extending the new legislation the government put in place to regulate LIBOR to cover further benchmarks in the foreign exchange, fixed income and commodity markets, based on an early recommendation of the Review – this legislation includes new criminal sanctions
  • extending the Senior Managers and Certification Regime to cover all banks that have a presence in this country, by bringing in foreign banks that have branches here
  • expanding the tough UK criminal regime for market abuse. As part of this, the UK will not opt in to EU rules.

A panel of market practitioners will be appointed, to involve and reflect the views of the financial services industry. The panel will be chaired by Elizabeth Corley, CEO of Allianz Global Investors. HMT notes that the review is without prejudice to the ongoing investigation being conducted by FCA into alleged historic misconduct in foreign exchange markets.

The government will consult on these steps in the Autumn.