Written on: 15 February 2022

15 February 2022 – The FICC Markets Standards Board (“FMSB”) today publishes the final Standard for the sharing of investor allocation information in the fixed income primary markets

Syndicate banks historically have had varied approaches to the internal sharing of investor allocation information relating to new issuances in fixed income primary markets on the day of pricing. Some syndicate banks do not share investor allocation information while others do share such information and have in place varied disclosure and consent mechanisms and associated monitoring and control procedures. As a result, some issuers and investors have a limited understanding as to how and why syndicate banks may use or share their allocation data with secondary trading desks. 

This Standard sets out certain minimum expected behaviours of syndicate banks in relation to the sharing of such investor allocation information within their institutions. It seeks to promote consistent baseline industry practices for this sharing of information and provide both issuers and investors with certain protections and controls as to how their allocation information is used. 

The Standard sets out that: 

  • Prior to a new issuance, the issuer should be informed that allocation data may be passed to the secondary trading desk and the issuer should be able to elect to prohibit the sharing of such information.  
  • Investors should be informed where a syndicate bank intends to share allocation data with its secondary trading desk and should be provided with an opportunity to ‘opt out’ of having their own allocation data shared.  

This Standard applies to issuers, investors and syndicate banks in relation to wholesale fixed income primary issuances brought to market in Europe. It does not apply to sovereign, supranational or agency syndications and sovereign, supranational or agency offerings of fixed income bonds in the wholesale primary markets. 

Myles McGuinness, CEO of FMSB said: “This Standard aims to promote a common understanding of the practice of, and rationale for, sharing investor allocation information internally within syndicate banks and allows issuers and investors to exert greater control as to how allocation data is used. This additional control and transparency should support the fair and effective operation of the new issuance process for all fixed income market participants.” 

This Standard is the third in the series of Standards aimed at making primary capital markets more transparent, fair and effective. It follows the Standard on New Issue Process in fixed income markets published in May 2017 and the Standard Risk Management transactions for New Issuance published in July 2018. 

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Notes to Editors 

1) The Fixed Income, Currencies and Commodities Markets Standards Board (‘FMSB’) is practitioner led, funded by members and operated by the major participants in wholesale markets to improve standards of conduct in wholesale fixed income, currencies and commodities (FICC) markets. It aims to bring transparency to grey areas in the wholesale FICC markets by identifying emerging vulnerabilities, clarifying and documenting practice and agreeing standards to improve conduct and market behaviour. Ensuring that wholesale FICC markets are transparent, fair and effective for all participants is at the heart of FMSB’s mission.  

FMSB Standards set out Core Principles and accompanying guidance on the most important aspects of practice where ambiguity risks undermining the transparency, fairness and effectiveness of markets. 

FMSB Statements of Good Practice set out clear expectations and guidance on good practice in relation to broader areas of uncertainty in wholesale FICC markets. 

FMSB Spotlight Reviews encompass a broad range of publications used by FMSB to illuminate important emerging issues in FICC markets. Drawing on the insight of members and industry experts, they provide a way for FMSB to surface nascent challenges market participants face and may inform topics for future work. Spotlight Reviews will often include references to existing law, regulation and business practices. However, they do not set or define any new precedents or standards of business practice applicable to market participants. 

All FMSB publications are available on the FMSB website at fmsb.com/our-publications/

2) Setting up the FMSB was one of the main recommendations from the Fair and Effective Markets Review (FEMR), which was conducted by HM Treasury, the Bank of England, and the Financial Conduct Authority.  

FEMR set FMSB four strategic goals: 

  1. Identifying global market vulnerabilities through scanning the horizon for emerging business practice risks. 
  1. Developing best market practice through the production of standards and other materials that create a common understanding. 
  1. Driving global adherence through ensuring standards are comprehensible and practical. 
  1. Developing consistent approaches to market practices through identifying gaps and inconsistencies in existing regulatory standards and working with other standards setting bodies. 

3) FMSB has a Standards Board drawn from senior executives from across wholesale markets, from corporate clients, asset managers, sell-side participants and intermediaries and infrastructure providers such as exchanges and custodians. In specialist, focused committees, subcommittees and working groups, industry experts debate issues and develop FMSB Standards and Statements of Good Practice, and undertake Spotlight Reviews that are made available to the global community of FICC market participants and regulatory authorities. 

4) FMSB members bring together sell-side investment banks, buy-side asset managers, market infrastructure providers and exchanges, custodians and users of the market such as corporates. This constitution is unique.  

The member firms are listed and available on the FMSB website at fmsb.com/who-we-are/ 

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