June saw the publication of the Final Report of the Fair and Effective Markets Review (FEMR). The report had three clear aims: 1) to assess existing FICC market operations; 2) to establish how to restore trust in the markets; and 3) initiate a global debate on issues and standards.

The Final Report is the result of extensive industry consultation exploring the root causes of misconduct in FICC market, the preventative measures regulators and the industry have already put into place, and whether there is still more to be done. This consultation period resulted in almost 1000 pages in responses from both global banks and smaller institutions, alongside feedback from infrastructure providers and public interest groups.

In the report, 21 recommendations for improved conduct and individual accountability are made. These include the need for tougher standards in the FICC markets and criminal sanctions for misconduct. There is also a call on senior leaders to shape conduct from within organisations, alongside a focus on regulators and firms taking a more forward-looking approach in identifying and mitigating risks at an earlier stage. Enforcement will come from the extended Senior Management Regime.

FEMR reflects Bank of England Governor Mark Carney’s call for ‘global standards for global markets’, with several of the report’s recommendations requiring coordination at an international level with bodies such as the International Organisation of Securities (IOSCO). Already FX committees in the US, Japan, Canada, Australia, ECB, Singapore and Hong Kong have expressed support for the report’s recommendations.

AFME has been closely involved at all stages in this process since FEMR’s inception 12 months ago by the Bank of England, HM Treasury and Financial Conduct Authority (FCA). The Bank of England named AFME Chair Frédéric Janbon as a member of its steering committee, together with AFME Board member Michael Cole-Fontayn and GFMA Chair Samir Assaf. In addition, the review's fixed income, rates and product expert group was chaired by AFME Board member Peter Nielson of RBS, while James Kemp, Managing Director of GFMA’s Global FX division, chaired the expert group for currencies.

The next step will for the industry and regulators to work together in determining the best way to implement these recommendations before the review’s chairs provide a full implementation report to the UK Chancellor of the Exchequer and the Governor of the Bank of England by June 2016.

Dialogue between the two groups is already underway. For example, the GFMA FX division and FCA hosted a highly successful roundtable involving around 50 major banks to discuss the authorities FX remediation programme – a first for the industry.

FEMR has already received substantial cross-sector support from the industry, including from our members. We look forward to building on the industry’s constructive relationship with the authorities to ensure the smooth implementation of FEMR’s recommendations, both domestically and, where applicable, internationally.

This is the start of a new era where we have the chance to impact, advance and drive fairer and more effective global markets. How the industry has changed will now, in part, be measured by how successfully individual institutions adhere to FEMR’s recommendations on standards.