Traders who take bets on market moves should have to comply with Britain’s tougher financial rules on individual accountability, regulators proposed yesterday.
The Financial Conduct Authority (FCA) said it was proposing that a range of people working on wholesale markets should be covered by new conduct rules finalised for bankers yesterday.
“The change is designed to expand the certification regime to ensure that individuals working in wholesale markets in relevant firms who could pose significant harm to the firm or its customers are subject to the new accountability rules,” the FCA said in a statement.
The FCA and the Bank of England’s Prudential Regulation Authority, published final accountability rules to make it easier to prosecute individuals for rule breaches.
The rules, little changed from drafts put out to public consultation, follow anger among lawmakers that few bankers were punished after British taxpayers had to bail out banks during the 2007-09 financial crisis.
The rules comprise the Senior Managers Regime for top officials whose appointments will be vetted by regulators.
There is a certification regime for more middle ranking staff whose appointments won’t be pre-approved. New conduct rules set out a basic standard for behaviour for all staff.
It was regrettable that it has taken the forex scandal to spur regulators to bring traders under the certification regime
“Today we have given clarity on rules that will embed personal accountability into the culture of The City,” FCA chief executive Martin Wheatley said. “New conduct rules will add further momentum to improving standards across the industry.”
Sarah Henchoz, an employment lawyer at Allen & Overy, said some firms may not be up for the challenge the rules will bring “and this could lead to retention issues for employers as well as difficulties attracting talent in the future.”
Last month the FCA, the Bank of England and Britain’s finance ministry published recommendations after banks were fined for trying to rig currency markets and interest rate benchmarks like Libor.
They called for the extension of the new rules for bankers to include staff working on markets.
Andrew Tyrie, chairman of parliament’s treasury committee, said on Tuesday it was regrettable that it has taken the forex scandal to spur regulators to bring traders under the certification regime.
The FCA’s consultation proposes including proprietary traders, who use their bank money to take bets on markets, and target traders who handle algorithmic or automated trading.
“It is important that the individuals responsible for the deployment of trading algorithms are fit and proper,” the FCA said.