Financial Markets Standards Board (“FMSB”) has today published the Transparency Draft of its updated Statement of Good Practice (“SoGP”) for Front Office Supervision of Wholesale Traded Markets.
Background
The Front Office Supervision SoGP was first published in 2017 and has been widely used by firms as an essential guideline. However, the impact of evolving regulation, the adoption of new technologies, and new hybrid operating models have meant that front office supervision faces increasing complexities and challenges giving rise to the need for expanded and updated guidance.
Key Changes
FMSB’s Conduct & Ethics Committee convened a series of Working Group discussions, with active involvement and collaboration from KPMG, to consider these challenges in detail. Specific steps that have been taken to expand or update the original document include:
- 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.
The SoGP is intended to supplement existing, broader supervisory guidance relating to front office supervision.
Next Steps
The Transparency Draft of the SoGP is open for comments from the wider industry for a six-week period. Please address any comments and/ or questions to secretariat@fmsb.com by 15th November 2024.
For more information:
Laura Conaghan
+44 (0)7929 72669
Laura.conaghan@fmsb.com