Financial Markets Standards Board (“FMSB”) has today published in final form its updated Statement of Good Practice (“SoGP”) Front Office Supervision of Wholesale Traded Markets. The SoGP sets out 15 good practice statements, grouped under five themes, to support firms with their approach to supervision of market and client-facing activities.
The SoGP represents an update to FMSB’s original 2017 publication on front office supervision and includes new guidance to help firms meet challenges to supervision that have emerged since then amid evolving regulation, new working practices and technological change. Significant updates include good practice guidance around:
- Establishing clearer support for the role of a supervision framework;
- Clarifying the concepts of supervision, responsibility and controls;
- Specifying the roles and responsibilities of a supervisor and the standards expected;
- Providing clarity around reasonable spans of supervision;
- Addressing conflicts of interest including those that may arise from delegation;
- Measuring the effectiveness of supervisors in their role;
- Assessing the quality and context of the information provided to supervisors; and
- Assessing supervisory data and related responsibilities for quality and proportionate controls.
Myles McGuinness, CEO of FMSB, said:
“We would like to thank our Members, led by Chris Dickens, Managing Director and Head of Non-Financial Risk for HSBC’s Markets and Securities Services, as Working Group Chair, for their sustained effort in providing their expertise and time to produce this comprehensive update. We would also like to extend our thanks to KPMG, who helped us develop the original guidance, and provided significant assistance again.
Effective supervision of trading in wholesale markets is key to maintaining fair and effective markets and it’s essential that the industry continually collaborates on how to approach emerging challenges. We will be taking forward our work with Members in this area this year by examining how firms are approaching and monitoring the issue of trading controls.”
Chris Dickens, Head of Non-Financial Risk, Markets and Securities Services at HSBC, who led the Working Group said:
“I am pleased that FMSB is able to publish this Statement of Good Practice given the key role that supervision plays in the control framework of a trading business. Given the quality of input from FMSB Member firms to our Working Group, supported by KPMG, I’m sure the document will prove valuable to firms in assessing their own approaches to supervision.”
The full Statement of Good Practice Front Office Supervision of Wholesale Traded Markets is available online and is intended to supplement existing, broader supervisory guidance relating to front office supervision.
About FMSB:
- Financial Markets Standards Board (FMSB) is an industry-led, member-funded global standards body for the wholesale financial markets.
- Created out of the Fair and Effective Markets Review (FEMR) in 2015, FMSB brings together its Members from banks, investment institutions, infrastructure and information providers, corporates, pension funds and interdealer brokers, to develop Standards, Statements of Good Practice and Spotlight Reviews that raise standards of behaviour, competence and awareness – to promote the fairness and effectiveness of global wholesale financial markets.
- As well as standard setting, subject matter experts from member firms debate issues in working groups and are able to benchmark their approaches against industry peers, thus helping to lift standards of conduct.
- FMSB’s full membership list is here
For more information/ media inquiries:
Laura Conaghan
+44 (0)7929 72669
Laura.conaghan@fmsb.com