Industry News

New Fixed Income, Currency and Commodities Markets Standards Board in the U.K. may need to be global to be effective

By James Langton |

Investment industry efforts to address fixed-income trading scandals in the U.K. may eventually come to Canada, says Ian Russell, the Investment Industry Association of Canada's (IIAC) president and CEO, in his latest letter to the industry.

Russell reports on several issues facing the investment industry in London, U.K. in the wake of the Brexit vote. The trading scandals in wholesale markets, including the LIBOR market-manipulation scandal, predates Brexit, but it remains an ongoing concern.

One of the responses to those scandals has been to establish the Fixed Income, Currency and Commodities (FICC) Markets Standards Board (FMSB), which is charged with developing "standards of conduct to improve the quality, clarity and marketwide understanding of wholesale FICC trading practices," Russell reports.

That board is working on several detailed standards for various aspects of the wholesale fixed-income markets, with the hope that they will be accepted globally.

"The FMSB recognizes the FICC market standards must be adopted across international markets to be effective, otherwise dealings could shift to non-U.K. jurisdictions to avoid compliance with the standards," Russell says in his letter.

To achieve broad acceptance, the FMSB plans to work with global policymakers, such as the Financial Stability Board and the International Organization of Securities Commissions  "to promote an international version of the standards" and to encourage international firms that operate in London "to extend the standards across their global trading operations," he notes.

Canadian investment dealers that operate in the FICC markets in the U.K. will be subject to the FMSB standards, Russell says, noting that the IIAC is looking into whether the introduction of a Canadian version of the standards is warranted.

"The IIAC and its Debt Markets Committee will review in detail the newly developed FICC market standards, monitor ongoing progress on development and implementation, and consider the merits of a Canadian version of the FICC standards," he says, adding that this will involve working with the Investment Industry Regulatory Organization of Canada (IIROC), the Bank of Canada and Canadian buy-side firms that are active in the domestic wholesale markets.

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