In June 2014, the Bank of England, H.M. Treasury and Financial Conduct Authority (UK Authorities) launched their Fair and Effective Markets Review process with the goal of identifying measures to restore confidence in the wholesale fixed income, currency and commodities (FICC) markets. The consultation process focused on addressing four central issues: (1) identifying what “fair” and “effective” mean for the FICC markets; (2) identifying areas in which the FICC markets have failed to meet these “fair” and “effective” standards; (3) determining whether existing reform processes are sufficient to address these shortcomings; and (4) establishing a program for addressing any gaps that remain.

Following an extensive consultation process, which included more than 200 meetings, round table discussions in Washington, DC, Brussels, London, New York and Singapore, and more than 1,000 pages of written commentary, the UK Authorities published their final report (Final Report) on June 10. The Final Report sets out an assessment of the reasons for the recent misconduct and perceived unfairness in the FICC markets, evaluates the progress made in existing regulatory reform efforts to address these issues and sets out a series of recommendations for additional reforms. Specifically, the Final Report recommends that the following steps be taken in the near-term: (1) make individuals active in the FICC markets more accountable for their actions; (2) require greater collective responsibility among firms active in the FICC markets to develop, and adhere to, certain behavioral standards through the elaboration of a new “FICC Market Standards Board;” (3) impose greater regulatory requirements on FICC market participants, including greater sanctions for misconduct and greater accountability of senior management; and (4) promote cross-border collaboration in developing a set of global standards for the FICC markets. The Final Report also makes two recommendations to guide future oversight of the FICC markets: (1) to promote fairer FICC market structures while enhancing effectiveness; and (2) to ensure a more forward-looking approach to identify and mitigate risks.

In particular, the UK Authorities note the need for greater international collaboration in order to ensure the ongoing effectiveness of the recommendations in the Final Report, and have undertaken an effort to provide a report on the process of implementing their recommendations by June 2016.

A copy of the Final Report can be found here.